Tech Giants Google and Apple Face $50.5 Million Showdown with South Korea's Regulators Over App Market Dominance

South Korea's regulatory authority, the Korea Communications Commission (KCC), has leveled allegations against tech giants Google and Apple, citing their exploitation of dominant positions within the app market. The KCC has issued a stern warning, cautioning both companies about potential fines amounting to $50.5 million.

The KCC has alleged that these two tech giants have imposed specific payment methods on app developers, which has resulted in delays during the app review process. This practice has been deemed unfair, significantly affecting the competitive landscape within the app market. The commission is in the process of notifying these companies of the necessity for corrective measures and will subsequently determine appropriate fines.

In 2021, South Korea introduced amendments to the Telecommunication Business Act, which effectively prohibited app store operators from mandating the use of their proprietary payment systems by software developers.

The Korea Communications Commission (KCC) has firmly stated that the enforcement of particular payment methods by Google and Apple, along with Apple's "discriminatory charging of fees to domestic app developers," may compromise the overarching objective of the law, which is to promote fair competition within the market.

Apple has expressed its disagreement with the conclusions outlined in the KCC's Examiner's Report. Apple contends that its recent adjustments to the App Store align with the Telecommunications Business Act. The company has conveyed its intention to maintain an open dialogue with the KCC, as has been its practice in the past.

Google has responded by characterizing the KCC's communication as a "pre-notice" and has conveyed its intent to conduct a thorough review and submit a formal response. Google has committed to evaluating the final written decision once it is provided and deciding on the appropriate course of action accordingly.

Subsequent to hearings involving both companies, Korean regulators have signaled their intent to impose substantial fines of up to 68 million won ($50.47 million) on Google and Apple.

Google's previous encounters with South Korean regulators are noteworthy. Earlier this year, in May, the South Korea Fair Trade Commission (KFTC) imposed a $32 million fine on Google for its perceived obstruction of developers attempting to release mobile video games on One Store, a local South Korean counterpart to Google's Play Store. Google's stipulation that Korean video game companies exclusively launch their new games on the Play Store from June 2016 to April 2018 effectively prevented local game developers from distributing their content via One Store. Furthermore, in 2021, the KFTC fined Google a substantial $177 million for its alleged abuse of market dominance within the Android operating system sector. Google contends that its contributions have facilitated the growth and global expansion of Korean mobile game developers who have launched their games via the Play Store over the past decade.