Regulator says Google’s billing policy violates Korean law

The South Korean regulator on network and IT services said Tuesday that it has reached the conclusion that Google’s new payment policy violates the Korean law that prohibits app store operators from forcing app developers to use in-app payment systems.

Based on its conclusion, the Korea Communications Commission will make a final ruling on whether Google’s new billing system is against the law after reviewing related cases based on the levels of coercion and unfairness. The regulator will also later decide on possible sanctions, it added.

Since Friday, app developers selling digital goods and services via Google Play were required to use Google’s payment system, and forced to take out links for external payment methods.

According to Google, disobedient apps would be banned from offering updates and would eventually be removed from the Google Play app store, from June 1.

“Despite the KCC’s judgement, if app store operators bar updates for app developers using external payment systems or block apps that use alternative payment methods from using the app store, we will carry out situational checkups,” the KCC said in a statement.

“If violations are found to be true, we will turn the case into an investigation.”

Noting the recently revised law on enforcement penalties for companies that do not comply with the regulator’s order for submitting documents or following restrictions, the KCC added it will actively utilize the enforcement penalty law.

Under the law, Google could face a fine up to 50 million won ($41,000) if it does not submit documents required by the KCC. The global IT giant could also be penalized with a fine equivalent to 0.2 percent of its daily sales if it does not comply with orders from the Korean regulator.

The KCC also unveiled a plan to set up app store damage reporting centers both online and offline this month, asking app developers to file reports as soon as they suffer damage from Google’s new billing system in violation of the law.

South Korea’s landmark law, which blocks dominant app store operators such as Apple and Google from forcing app developers to use their payment systems, became effective in September.

“We will put efforts into ensuring the users’ right to choose by actively applying laws and enforcement decrees so that the legislative purpose is faithfully realized and the system is settled,” said Han Sang-hyuk, chairman of the KCC.

The Citizens United for Consumer Sovereignty has criticized Google’s in-app payment requirement, saying Google’s payment policy is leading to an increase in content prices for some streaming service providers here.

Pointing out that Google’s billing system led to greater burden on consumers, the CUCS added that it will consider suing Google for violating the law if no improvements are made.

Google Korea could not be reached for comment as of press time.

By Kan Hyeong-woo (hwkan@heraldcorp.com)