Apple and Google Fined in South Korea Over App Store Violations
Regulators penalize tech giants for forcing payment methods and unfair app review practices.
1Regulatory Action in Korea
The Korea Media and Communications Commission determined that both Apple and Google violated the Telecommunications Business Act. Following investigations and on-site inspections conducted since 2022, the regulator issued significant financial penalties. These companies must now modify their business practices to comply with local app market regulations and legal standards.
2Financial Penalties Imposed
Google faces a fine of KRW 42.9 billion, approximately 32 million dollars, for its non-compliant app store operations. Apple is required to pay KRW 20.81 billion, totaling 15.6 million dollars. These specific monetary penalties reflect the regulator's assessment of the severity of the identified violations regarding payment and review procedures.
3Forced Payment System Violations
The investigation revealed that both companies forced developers to use their proprietary in-app payment methods. Furthermore, they imposed a 26 percent commission on third-party payments while simultaneously prohibiting the use of external payment options. These practices restricted developer choice and maintained control over the financial transactions within their respective ecosystems.
4Opaque App Review Processes
The regulator identified that both firms delayed app reviews without providing clear justifications to developers. Additionally, the companies failed to respond to individual inquiries regarding these review delays. This lack of transparency created significant operational hurdles for developers attempting to launch or update their applications on the platforms.
5Discriminatory Commission Calculations
Apple specifically faced scrutiny for calculating commissions differently for South Korean developers compared to overseas counterparts. Apple based its cut on purchase prices including VAT for domestic developers, while using pre-VAT prices for international developers. This discrepancy resulted in higher effective commission rates for local entities operating within the market.
6Mandated Operational Changes
The KMCC now requires both companies to accept external payment methods and revise their internal app review procedures. Apple must specifically eliminate discriminatory practices between domestic and overseas developers. These mandates aim to align the companies' local operations with the regulatory requirements established by the South Korean communications authority.
7Global Context of Compliance
The pressure to allow external payments is not unique to South Korea. Both Apple and Google already permit external payment options in the United States and the European Union. This global shift indicates a broader trend of regulators challenging the closed-loop payment systems traditionally maintained by major mobile platform providers.
8Implications for Platform Governance
This ruling highlights the increasing difficulty tech giants face in maintaining uniform global policies. As regional regulators demand localized compliance, companies must balance their standard business models with specific legal mandates. Future platform governance will likely require more flexible frameworks to accommodate varying international standards and avoid further regulatory intervention.