South Korea fines Google and Apple 63.7 billion won over in-app payment rules

South Korea’s Korea Media and Communications Commission (KMCC) on Wednesday 28 October fined Google 42.9 billion won and Apple 20.81 billion won, a combined 63.71 billion won ($47.6 million), for practices that it said effectively forced app developers to use the companies’ own in-app payment systems.

It is the first penalty under South Korea’s amended Telecommunications Business Act of 2021, which bars app store operators from forcing developers to use specific payment methods or unfairly delaying app reviews, The Korea Herald reported.

According to the commission, both companies technically allowed outside payment systems but charged developers who used them a 26% commission and attached restrictions that made the alternatives commercially unattractive. It also found that both companies delayed app reviews without adequate explanation. The regulator called the conduct a “very serious violation”.

Apple was also penalised for calculating its 30% commission on tax-inclusive prices for Korean developers between July 2015 and January 2023, while using tax-exclusive prices for developers elsewhere. The commission estimated this brought Apple about 149.6 billion won in extra commissions. Apple attributed the difference to changes in Korea’s value-added tax law, which the regulator rejected.

The KMCC ordered both companies to end the violations, change their business practices, provide for external payment options and submit compliance plans and reports. SBS reported that the regulator set a deadline of early next year for the corrective measures, and that Apple and Google issued statements indicating they intend to appeal.

KMCC Chair Kim Jong-cheol said he hoped the measures would bring “meaningful changes to the market that app developers and end users can actually feel”. The fines were first proposed in October 2023 by the commission’s predecessor.