Google, Apple fined W63.7b over in-app payment practices

Google and Apple said they cannot accept the Korea Communications Commission's decision to impose a combined fine of 63.7 billion won ($48.1 million) on the two companies for violating the Telecommunications Business Act through the forced use of specific in-app payment systems and unjustified app review delays, and said they would review their options.

The commission held its 46th plenary session Wednesday at the Government Gwacheon Complex in Gyeonggi Province, voting to impose a fine of 42.9 billion won on Google and 20.81 billion won on Apple. The commission also found Apple's practice of charging different commission rates to domestic and foreign app developers to be unlawful. Criminal referrals against either company were not pursued.

The sanctions mark the first enforcement action taken under provisions added to the Telecommunications Business Act in 2021 that prohibit app market operators from forcing the use of specific payment methods and from unjustifiably delaying app reviews. The commission conducted a fact-finding investigation into the two companies' relevant conduct from August 2022 to September 2023.

According to the commission, Google and Apple allowed third-party payment systems — those developed and provided by app developers themselves — but imposed a 26 percent commission on such transactions while placing restrictions on usage procedures and functionality, effectively limiting developers' ability to choose their preferred payment method. Google additionally restricted how prices could be displayed depending on the payment method chosen, while Apple required developers seeking to adopt third-party payment systems to submit a separate app. The commission determined that these conditions made third-party payment systems difficult to use, in effect steering developers toward the companies' own in-app payment systems.

Both companies were also found to have failed, when app reviews were delayed, to notify developers of specific reasons for the delay or to clearly communicate the cause and expected timeline even when developers made inquiries. The commission determined this conduct also constituted unjustified app review delays.

From July 2015 to January 2023, Apple charged domestic app developers a 30 percent commission calculated on the final consumer price inclusive of value-added tax, while applying the same 30 percent rate to overseas developers based on the supply price exclusive of VAT. The commission ruled this amounted to unlawful discrimination against domestic developers.

In response, the commission ordered both companies to improve their payment policies — including by providing alternative payment options through external links within apps — so that developers can meaningfully choose payment methods other than in-app payment, and to adjust third-party payment commission rates to reasonable levels.

Google was additionally ordered to revise its user experience guidelines for third-party payment systems, while Apple was directed to reform its requirement that developers submit a separate app when introducing third-party payment.

Korea Communications Commission Chairman Kim Jong-cheol said a fair and sustainable app market ecosystem can only be achieved through a cooperative relationship between app market operators and developers. "We hope this sanction will serve as a turning point for real structural change in the market — change that developers and users can actually feel," Kim said.

Earlier, Google announced a payment policy overhaul in March that included allowing external payment options and lowering service fees. However, the revised policy has not yet taken effect in South Korea and was therefore not factored into the fine calculation. The commission said it would assess whether Google's revised policy satisfies the corrective order after reviewing the company's implementation plan and results.

Apple also briefed the commission on voluntary improvement measures it plans to take to enhance the app market transaction environment.

Both companies must submit an implementation plan within one month of receiving the corrective order and complete the required improvements within three months.

Both companies expressed regret over the fines and said they would review their next steps.

Google said it had recently announced expanded payment flexibility and lower fees for developers through policy updates. "We are disappointed that the commission's decision does not sufficiently reflect Google's efforts to comply with the law, nor our contributions to supporting Korean developers' innovation and global growth," the company said, adding that it would carefully review the written decision once received before determining how to respond.

Apple argued that in the past year alone, the App Store ecosystem generated 38.1 trillion won in developer billings and sales, more than 90 percent of which went entirely to developers with no commission paid to Apple. "Apple believes the changes it has made comply with the Telecommunications Business Act. We are disappointed by and disagree with the Wednesday decision," the company said, adding that it is reviewing its options under Korean law.