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Google CEO Sundar Pichai. Photo: Bloomberg

Google CEO Sundar Pichai faces probe in South Korea for in-app billing system

  • If Fair Trade Commission regards Google’s policy as illegal, the agency may impose sanctions including a fine
  • One lawmaker estimated Korean app users will be paying an additional US$185 million every year as a result of the in-app payment policy
A group of consumers in South Korea reported Google’s top executives to the local police on Friday, for the company’s in-app billing system that forces domestic app developers to pay hefty commissions.

Citizens United for Consumer Sovereignty (CUCS) said it reported Google CEO Sundar Pichai, Google Korea CEO Nancy Mable Walker and Google Asia-Pacific President Scott Beaumont to the Gangnam Police Station in Seoul for allegedly violating the Telecommunications Business Act.

“The enforcement of Google’s in-app payment policy has raised costs, burdening consumers and damaging creators,” a representative from the civic group said. “App developers have no choice but to accept the request from Google, which accounts for 74.6 per cent of the app store market share.”

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Google started enforcing the controversial billing system in Korea from June 1 by removing apps on the Google Play Store if the developers of those apps direct their users to external systems for payment whereby they are not liable for the 30 per cent commission taken by the US tech firm.

Although the National Assembly passed a law last year to prevent Google’s in-app payment policy, the company has circumvented regulations by offering alternative payment options via its own system.

It has forced app developers to use either its own billing system charging a 30 per cent commission or alternative payment options charging a 26 per cent commission.

The office of Kim Yeung-shik of the ruling People Power Party estimated Korean app users will be paying an additional 230 billion won (US$185 million) every year as a result of the in-app payment policy.

CUCS also plans to report Google to the Fair Trade Commission (FTC).

The antitrust watchdog has already reportedly investigated Google’s alleged violation of the Fair Trade Act, as the Korean Publishers Association filed a complaint in April.

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If the FTC regards Google’s policy as illegal, the agency may impose sanctions including a fine.

“We are not able to comment on our ongoing investigation,” an FTC official said.

Last month, the Korea Communications Commission told reporters that it has embarked on investigations into Google, saying its in-app billing system could be unlawful.

Lawmakers and content creators have also levelled criticisms at Google.

“Google’s excessive greed has threatened the ecosystem of the mobile content industry,” Representative Cho Seung-rae of the main opposition Democratic Party of Korea said.

The lawmaker hinted at possible solidarity with other lawmakers, regulators and non-governmental organisations in the US, Europe and other developed countries.

Cartoonists raised concerns about the possible collapse of Korea’s online cartoon industry.

“Naver and Kakao began raising subscription fees,” the Webtoon Association said in a statement. “This will reduce earnings of creators.”

Despite the intensifying criticisms, Google has not changed its stance on the in-app payment policy.

Google Korea was asked for a comment but did not respond.