Google’s response to Korea ‘laughable’: CAF leader

Tech

Published: 21 Nov. 2021, 18:00

Google’s response to Korea ‘laughable’: CAF leader

Meghan DiMuzio, executive director of the Coalition for App Fairness (CAF), speaks with the Korea JoongAng Daily in an interview held on Wednesday in western Seoul on the meaning and application of the ″Anti-Google law.″ [PARK SANG-MOON]

Korea's ongoing battle with the world's largest tech companies is shaping up to be epic. Months in, the country's aggressive gambit, in the form of the "Anti-Google law," has been met with a seeming flimflam from Google and a stiff-arm from Apple.

It might be a disappointing result if it were not for the fact that the world has taken note, and Korea is fast becoming a base camp for a global resistance to what is referred to by some as a duopoly.

Companies in the West were already lining up against alleged abuses by the dominant players. Over 60 of them, including Epic Games, Match Group, Spotify and Tile, have joined the Coalition for App Fairness (CAF), a Washington-based pressure group formed in September last year and going after Google and Apple practices it finds offensive.

The main issue motivating the opposition is the forcing of apps to use the payment systems of Google Play and Apple's App Store, which charge very high rates. Apps often lose about a third of their sales to these companies, and they are not really able to take their business elsewhere.

For those championing the crusade against these practices, the simple passing of the Anti-Google law, which releases apps from the obligation to use app-store payment systems, was progress. With the law becoming effective in September, Korea took the first step as much of the rest of the world dawdled. The pushback from Google and Apple was icing on the cake, as it seemed to show that the companies targeted by the legislation were just too big to be affected by it.

"It's a slap in the face," Meghan DiMuzio, executive director of the CAF, says, in reference to the response from Google, in which the company gave the apps the right to opt out of the Google Play payment system but would still charge them as much as 26 percent of sales.

Apple has chosen to do nothing, still requiring the use of the payment system.

"It is laughable of course, because in what world do we ever pay for something that gives us nothing in return," DiMuzio told the Korea JoongAng Daily in an interview held on Wednesday.

"They continue to charge app developers without providing any services in return. How is that justified?"

"It's just as clear as mud."

Some of the companies challenging the app policies of Apple and Google were in Korea Tuesday to attend the National Assembly's Global Conference for Mobile Application Ecosystem Fairness.

DiMuzio was there and sat down with the Korea JoongAng Daily after the session to discuss her thoughts on Google, Apple and the Korean response to their app policies.

Following are edited excerpts.

Q. The CAF has been supporting Korea's Anti-Google law since earlier this year. How do you feel about the law passing the National Assembly and how is it resonating in the United States?

A. We were very pleased and excited about how it turned out, especially with the worldwide response and excitement it has generated. Also, yesterday's conversation, bringing together the leadership of Korea as well as the international leaders and business leaders was an opportunity that couldn't be missed. And it's something that we're really going to use as a springboard to accelerate conversation going forward.

I think what U.S. policy makers are reacting to the most is that they now know it's possible. They really see Korea as a worldwide leader.

You have to remember that this is the first time that Google and Apple have really been held accountable for their behaviors in the app stores. The first domino is always the hardest domino to fall, and so U.S. policy makers are really looking to Korea and watching how the law is going to be implemented.

Officials from the Korea Communications Commission (KCC) speak during a meeting with local associations representing the start-up, mobile and gaming companies to hear their thoughts on the ″Anti-Google law″ on Oct. 19 at Gangnam, southern Seoul. [YOON SO-YEON]

How did you come to form the CAF? What progress has been made in the app market issue around the world since the CAF was founded?

We started with 13 members in September 2020. They were all united with the same concerns. A couple of the members individually had been pursuing changes with Apple and Google on their own for a while. And they came to the realization that when you're going up against two monolithic companies, you can't fight that fight alone. So we banded together with companies mainly based in the U.S. and Europe, like Tile, Epic Games, Match Group, Spotify, Proton Mail and a few other smaller apps.

We are currently in a place where we are not only excited but also very confident. There is worldwide momentum.

We are seeing significant activity happening not only in Korea but also in the U.S. Congress and the European Commission, which is currently considering the Digital Markets Act. In India, their competition authority is set to release their initial report at the end of this year, and Australia has released the results of their investigation into Apple and Google and their behavior. The United Kingdom, in fact, released an investigation through their competition authority, and is currently taking a market study to understand how it is impacting the market.

So yes, I would say we're being hugely successful. It is the fight of a lifetime, one that I'm very passionate about because it is the wave of the future. I think we have the ability to work together to make sure that we're all creating a healthy digital marketplace where we can have innovations that we never imagined to be true.

Have you had a chance to sit down with Google or Apple regarding this issue?

I wouldn't say they're open to having a productive conversation. They're not coming to the table even with other policy makers to try to find a solution to this issue. As you can see from their responses here in Korea, Apple flat out refused to comply with the new law and Google offered a half-hearted compliance plan.

So I wouldn't say that they're interested in talking with us because they already know we won't accept anything but some sort of change to the existing app stores to make them more competitive and level the playing for app developers and consumers. They don’t even acknowledge that it's a problem.

Unlike the members of the CAF, Korean companies refrain from speaking out on this issue. Why do you think that is?

We try to provide opportunities for our members to publicly comment and share their stories as much as possible. I always encourage people to share their stories through the coalition, because that is the experience that resonates the most with policy makers whether it's in Korea or elsewhere.

That being said, the fear of retribution is extremely real.

What's unique about this issue is that you have two gatekeepers — a duopoly — who control even access to the marketplace. And when you are a smaller and medium-sized developer, you may not have the resources that Epic Games or Match Group have; you don't have the ability to take on the fight in the same way.

While I'm extremely grateful to Epic Games and Match particularly for their participation, I am also well aware that there is a whole subset of our members who don't have the ability to fight in the same way. So I feel my role as a leader is to represent them and give their concerns a voice.

We hear regularly that developers have been targeted by Apple and Google. I can't speak for their specific experiences, but we have similarly heard that the work of the coalition is incredibly important for those app developers because it does provide a little bit of a backbone for them and the ability to speak out publicly.

The Korea Communications Commission (KCC) has set out plans to fine app market operators 2 percent of the revenue generated from coercing app developers to use their in-app payment systems. Do you think that would be enough?

Absolutely not, because these two companies have endless supplies of money to pay these fines. That's the hard part about legal costs or monetary penalties is that when you have the ability to fund legal cases or pay off fines; even though it takes away your profit, it still allows you to engage in the same anti-competitive behavior.

What I would encourage KCC to do is to look at how to make the most robust enforcement and accountability mechanism that they can do within the purview of the law. Because the process is ongoing, I'm not sure what an example of that would be, but I would definitely say in order for Google and Apple to take notice, and in order for them to actually change their behavior, there needs to be the most teethed accountability as possible within the KCC implementation of the law.

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]