In Kakao vs. Google, the little guy is still fairly big

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In Kakao vs. Google, the little guy is still fairly big

Published: 07 Jul. 2022, 18:36

Kakao CEO Namkoong Whon [KAKAO]

Kakao is shaping up to be David to Google's Goliath.

The Korean company is taking on the in-app payment policy of the $1.5-billion-market-cap tech giant after updates for its Kakao Talk messenger were disabled for a terms of service violation. It has posted a payment link guiding users to payment methods independent of Google's Play Store.

Kakao Talk is the first major app to be stopped from making an update due to the in-app payment issue.

On June 30, Google turned down Kakao's request to distribute its latest Kakao Talk update because the app developer has been steering business to other payment gateways. The last Kakao Talk update available on the Google Play Store is from May 23.

Kakao fought back a day later on July 1 by distributing an app install file that lets users download Kakao Talk from the website. But users who download from the internet cannot purchase emoticons directly through the app and must do so by making payments on the website.

A pedestrian walks by the Google Startup Campus in Gangnam, southern Seoul on Aug. 30, 2021. Video streaming services are raising fees for subscribers who sign up via app if the app is downloaded from the Google Play Store. [NEWS1]

"Google refused to approve our latest update on grounds that we have violated its payment policy," Kakao said. "We plan to maintain the two-track method where we inform our users about both in-app payments and outside links."

Google declined to comment on the matter.

Starting April 1, Google said that all apps must either use its own in-app purchase system and pay up to 30 percent commissions or a third-party system and pay 4 percentage points less. Apps cannot include a link that directs users to pay outside the app to avoid commissions.

The company has been warning app developers that those who do not abide by the company's new payment policy will not be able to update their apps and may even be removed from the app store starting June 1.

Most app developers have chosen to abide by Google's new rules and are raising prices by up to 20 percent to cover the new in-app payment fee. No app developer has reported being removed.

Han Sang-hyuk, Chairman of the Korea Communications Commission (KCC), is seen walking into a meeting at the Gwacheon headquarters in Gyeonggi, June 29. The KCC will meet with officials from Kakao and Google due to the two companies' conflict over the app market operator's in-app payment policy. [NEWS1]

The Korea Communications Commission (KCC) has not taken any action yet. It warned in April that it will deem Google's actions as illegal if it pushes through with the policy and take measures accordingly. It still argues that the matter needs to be handled "carefully."

"We need a thorough investigation on whether it goes against the law and what measures can be taken," KCC Chairman Han Sang-hyuk told reporters Wednesday.

"We will look into what inconveniences have been caused for the users and see what can be done through talks between the two companies."

The KCC held a closed-door meeting with Kakao and Google Korea to discuss the matter on Thursday.

BY YOON SO-YEON [[email protected]]