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FTC digs into Google’s disputed app billing

South Korea’s antitrust watchdog set out to investigate US-based tech giant Google on its enforcement of the disputed “in-app billing” system, responding to market backlash that the given payment system is an abuse of power by a market monopolizer.

The Fair Trade Commission has recently placed a research and service order to figure out ways to restore fair competion in the mobile app market, officials said Wednesday. The research will involve interviews with app developers on the anticipated fallout of Google’s mandatory in-app billing.

The interviews will be carried out anonymously, taking into account the rampant unfair practices in the mobile app market environment. According to an earlier survey conducted by the FTC on app developers, 40 percent of respondents said they experienced unfair market practices.

The key goal of the research, according to officials, is to analyze the incumbent market structure that de facto forces app developers to register their products on Google Play and to figure out alternative solutions.

Last September, Google unveiled a plan to require all app developers on Google Play to use its exclusive billing system, which takes a 30 percent commission from purchases of digital products. The service fee will be used to reinvest in the platform and also help reduce the commission burden for 99 percent of developers globally, the information technology firm claimed.

Faced with persistent backlash from consumers and developers, the company later added that it will lower the rate to 15 percent for the first $1 million of revenue per developer, starting July 1.

This renewed solution came in line with rival Apple’s decision to lower its own app store commission by half for developers that earn up to $1 million annually, starting this year.

But the Korea Internet Corporations Association, representing major local tech businesses including Naver and Kakao, claimed that such a move still undermines fair competition and urged the National Assembly to pass a bill to restrict such attempts.

Last year, lawmakers laid out a revised bill of the Telecommunications Business Act that would ban app market operators from enforcing designated payment methods in mobile content transactions.

Sales from apps on Google Play store in South Korea last year were estimated at over 5 trillion won ($4.5 billion), according to a government report. The corresponding survey was conducted on 246 companies that altogether accounted for over 75 percent of the country’s mobile app sales.

By Bae Hyun-jung (