Hey, Google! Thanks for nothing, Korea says.
IT companies and start-ups argue that taking the rate down to 15 percent from 30 percent is all well and good, but they complain that they are still forced to use the U.S. company's billing system.
On Monday, Google said that it would only charge 15 percent on in-app payments from July 1. In-app payments refer to users purchasing features inside a mobile app, like subscription services or game items.
"The decision marks the end of a 30-percent commission rate system at Google," the company said in a statement.
The 15 percent commission will only apply up to $1 million of in-app purchases, annually. Sales above that amount will still attract the 30-percent rate. For example, if an app raised $1.5 million from in-app purchases, Google will claim 15 percent of $1 million and 30 percent of $500,000.
But as most apps achieve less than $1 million a year in in-app purchases, 99 percent of Google Play store apps worldwide are to benefit from the 15 percent commission, the company said.
Google is currently only imposing a commission on in-app purchases for mobile games. Last year, the IT firm announced it would extend that obligation to every app offered on its Google Play app store from October, which means every app will have to pay the incurred commission fee.
Google critics say the commission fee cut is a fake gesture to avoid legislation that could prohibit the use of its billing system for good.
After Google's announcement last year, Korean IT firms and start-ups accused the U.S. tech company of misusing its market dominance. Their complaints and lobbying activities led to lawmakers recently submitting bills to prohibit Google and Apple from requiring the use of their payment systems.
Kim Jae-hwan, policy bureau director at K-Internet, a nonprofit organization that represents domestic IT firms, says Google has intentionally missed the point. The problem has always been about requiring the payment system, not the commission rate, he says.
"We never specifically complained about the commission rate," said Kim. "If the in-app payment system offered by Google and Apple is worth it, IT firms will use it paying whatever commission fee they ask for, but that shouldn't be their only option.
"Google says the lower commission will benefit 99 percent of app publishers in the country, but I bet only one out of 100 IT firms actually make money from in-app payments. The 30 percent commission is still effective in the top 1 percent that makes more than $1 million. The company wants to convey they've taken a big step back, but I'm doubtful the changed commission rate will take big chunks of revenues from Google."
In November, Apple lowered commissions on in-app payments to 15 percent, but the benefit was limited to small-sized app operators that generate less than $1 million a year.
Korea Startup Forum's policy director Jung Mina points out that Google's commission rate cut is better than Apple's in that the 15 percent commission fee up to $1 million in in-app gains is applicable to app publishers of all sizes.
"Google has offered a wider discount than Apple, so it is helpful for small and mid-sized start-ups," said Jung.
"But putting aside the commission cut, we're hoping Google could make a bigger decision when it comes to forcing its payment system to all apps. Each app provider has different circumstances to consider as game businesses are different to over-the-top services."
Korea isn't the only market opposing Google and Apple's forced billing system. According to U.S. media outlets, lawmakers in Arizona and Minnesota have recently introduced bills to allow app publishers to bypass the policies of the IT companies. There were similar legislative efforts in North Dakota last month, but they ultimately failed to pass .
BY SONG KYOUNG-SON [email@example.com]