Google’s South Korean unit announced they have been discussing with the company headquarters to lower the planned 30 percent commission rate for in-app purchases. According to the Parliamentary Committee on Science and Technology lawmakers, Google Korea representatives have been discussing lowering the proposed commission.
Amid the commission rate oppositions, South Korean developers prompt Google to reduce its planned 30 percent cut on in-app digital goods purchases.
Due to the high commission costs, local software developers have sent Google complaints, asking to lower the rate. Based on government estimations, Google’s new policy would inflate app store prices for local developers by over 153 billion won ($136 million). Although Google has claimed that the policy would only affect 2 percent of South Korean app developers in Google Play, South Korean tech groups, app creators, and politicians still voiced their criticisms. South Korean app developers have argued that Google’s move would only local industries and make customers pay additional fees.
In November 2020, South Korean lawmakers urged Google to bring down the commission rate and follow Apple’s move. Similar to Google, Apple also collects a 30 percent commission through its billing system. However, Apple announced they would be lowering the standard App Store commission from 30 percent to 15 percent.
Google’s New Billing Policy
Last year, the tech company revealed a policy change regarding commissions on digital transactions in Google’s app store. Under the policy, Google would take a 30 percent cut from all payments made within apps available in Google Play. According to developers, Google’s 30 percent cut would weaken their capacity to compete in app markets. Based on ministry reports, Google Play’s sales reached over 4.9 trillion won ($4.4 billion) in 2020.
Additionally, ministry reports have stated that the new billing policy’s impact on application fees reached over 2.8 million won ($2,500) last year. According to Korea Mobile Internet Business Association, 35 percent of the affected companies would adhere to the new billing policy. Moreover, 29 percent of the affected companies would increase user fees, while 27 percent would switch to other application stores.
In response to Google Play’s new billing system, ONE store offered a 50 percent discount last year to small developers. Aside from the discount, ONE store also enforces a lower commission rate than Google. Launched in 2016, ONE store is an SK Telecom subsidiary.
Check out other must-read articles from KoreaTechToday:
- Ministry of ICT: Google Service Blackout First Case Under ‘Netflix Law’
- Korea Fair Trade Commission to Review Google’s In-app Policy Change
- ICT Ministry to Investigate Apple and Google In-App Payment Systems
- LG’s 2021 Smart TV Lineup Will Soon Allow Access to Google’s Stadia