KMCC to fine Google and Apple a combined 63.7 billion won over forced in-app payments

The media regulator is set to dock the firms a total of $48.1 million for allegedly coercing developers to use their in-app payment systems, but the numbers pale in comparison to what the EU fined the tech giants for similar violations.

The Korea Media and Communications Commission (KMCC) is set to impose a combined 63.7 billion won ($48.1 million) in fines on Google and Apple for forcing app developers to use their in-app payment systems, three years after the regulator first announced its intention to penalize the two U.S. tech giants.

The KMCC will hold a plenary meeting Wednesday to approve corrective orders imposing fines of 42.9 billion won on Google and 20.8 billion won on Apple for violations of the Telecommunications Business Act, according to multiple sources on Monday.

The commission finalized the penalties during a closed-door meeting Monday after receiving a briefing from its administrative office on the proposed fines and the details of the corrective orders.

“There were no disagreements,” a KMCC official said.

In-app payment refers to a system that requires users to make purchases through Google’s or Apple’s payment systems rather than those operated by app developers.

The two companies have charged developers commissions of up to 30 percent, depending on their revenue, which brought complaints from developers that the fees were excessive.

In 2021, Korea became the first country in the world to pass legislation banning mandatory in-app payment systems through an amendment to the Telecommunications Business Act, widely known as the “anti-in-app payment law.” The amendment authorized the regulator to impose fines of up to 3 percent of an app marketplace operator’s relevant revenue for violations.

Following the amendment, Google revised its policies to allow alternative payment methods that it had previously prohibited. However, critics argued that the change offered little practical relief because developers using external payment systems still faced additional costs, including fees charged by domestic payment gateway providers.

In October 2023, the Korea Communications Commission (KCC), the KMCC’s predecessor, announced that it would impose fines of 47.5 billion won on Google and 20.5 billion won on Apple under the law.

The final decision was delayed for years, however, as the KCC faced prolonged operational disruptions, including a period when it operated with only two commissioners. The KCC was then dissolved in October last year.

“There was considerable deliberation over when to finalize the sanctions, particularly amid political upheaval following the change in administration and emerging trade tensions with the United States,” a source familiar with the matter said.

During the delay, the KCC recalculated the companies’ relevant revenue and drew up a revised proposal in March last year to fine Google 42 billion won and Apple 21 billion won. It also summoned representatives from the companies’ headquarters to hear their positions.

“I expect a decision to be made before the end of October,” KMCC Chairperson Kim Jong-cheol said during a parliamentary audit by the National Assembly’s Science, ICT, Broadcasting and Communications Committee on Oct. 12.

Some experts have criticized the regulator for taking so long to reach a decision.

“Once illegal conduct is confirmed, corrective action or sanctions should follow promptly,” Lee Seong-yeob, a professor at Korea University’s Graduate School of Management of Technology, said. “Delaying a decision over internal issues after spending years investigating and preparing sanctions will leave a blemish on the regulator’s record.”

The relatively small size of the fines is also likely to draw scrutiny.

Last year, the European Commission fined Apple 500 million euros ($559 million), which was approximately 800 billion won at the time, for violating the Digital Markets Act through its in-app payment practices. In July this year, it also decided to impose a fine of 890 million euros on Google.

“Given the scale of these tech companies’ revenue, the fines imposed in Korea are unlikely to deal a significant blow,” Choi Kyoung-jin, a professor at Gachon University’s College of Law, said.

Experts also say the criteria used to calculate the fines could become a point of contention.

“There will also likely be disputes over how the fines are calculated, including whether they are based on revenue generated in Korea or at the companies’ headquarters,” said another professor who requested anonymity.

The industry is also closely watching whether the sanctions could heighten trade tensions with the United States.

The concerns come amid an ongoing trade dispute following a fine of more than 600 billion won imposed on Delaware-based Coupang in June over a massive personal data breach, which drew objections from the U.S. government.

“Korea was the first country to introduce a ban on mandatory in-app payments, and U.S. companies are the first to face sanctions under the law, which raises concerns that another trade dispute could emerge,” Prof. Lee said. “The government also needs to fully explain the purpose and legal grounds for the sanctions.”

BY SUNG JI-WON [[email protected]]