South Korea to probe Apple and Google over in-app payment rule break

South Korea’s communication watchdog, the Korea Communications Commission (KCC), said Tuesday it will investigate Apple and Google over potential violations of the country’s in-app payment rule. Local media reports noted that the agency will start this investigation on August 16.

Apart from Apple and Google, the KCC is also investigating SK Group’s homegrown app store called ONE Store. The watchdog said that it had looked into the practices of all three app stores since May 17, and determined that they might have breached the country’s telecommunication act passed last year.

The new rule allows developers to use third-party payment options for in-app purchases and bars app store operators from forcing them to use their own systems. Apple and Google both have agreed to adhere to these rules and provide a 4% discount from app store fees for using alternative payment operators.

In guidelines published for developers in June, Apple asked developers targeting the South Korean App Store to submit a separate binary for using third-party purchasing systems.

Google’s rules about in-app purchases  which came into effect in June mandate Google Play Billing globally, apart from regions like South Korea. However, these rules prohibit apps from including external payment links even in the country. The company blocked the KakaoTalk chat app’s updates last month for breaking these rules. In response, the South Korean messaging giant agreed to remove these links. Earlier this month, KakaoTalk said that its special emoji purchases have fallen by a third due to Google’s rule change. In June, KCC told TechCrunch it will monitor the situation regarding apps using external links for in-app purchases. We have asked KCC if for a comment, and we’ll update the story if we hear back.

The KCC said if it finds companies to be breaching the in-app payment rules, it will issue correction orders or fines — which can be up to 2% of the company’s average annual revenue for related business.

In response to KCC’s probe, Google said it will cooperate with the investigation.

“We have worked closely with government stakeholders and our developer community to expand user choice in Korea in compliance with the new law, while continuing to ensure we can invest in the ecosystem and provide a safe and high-quality experience for all. As we have at each stage of this process, we’ll continue to cooperate with the KCC,” a company spokesperson said in a statement to TechCrunch.

Apple and Google have both faced scrutiny about app store monopolies the world over. Apart from South Korea’s telecommunication law, the EU adopted the Digital Markets Act (DMA) law in July to force tech giants to operate under fair market practices, which may prohibit app stores from using a single payment method. U.S. lawmakers are also mulling rules that aim to end Apple and Google’s monopoly on app distribution on mobile devices.

We have reached out to Apple for a comment, and we’ll update the story if we hear back.

Story updated with Google’s comment on the development. 

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