South Korea Fines Tech Giants for App Store Violations

South Korean regulators fined Alphabet’s Google and Apple a combined 63.7 billion won, or $47.6 million, on Wednesday. The Korea Media and Communications Commission determined that both companies abused their market dominance by forcing local developers to use their proprietary payment systems. The regulator also cited unfair delays in the app review process. The penalties split the total fine, assigning 42.9 billion won, or $32 million, to Google and 20.8 billion won, or $15.5 million, to Apple.

The commission ordered both firms to allow South Korean developers to use external payment links within their applications. They must also improve their procedures for reviewing new apps and updates. This decision follows a multi-year investigation into potential violations of a 2021 law. That legislation prohibits app store operators from requiring developers to use specific payment methods. South Korea enacted the law to give users more control over how they pay for digital goods.

The regulator found that Google and Apple technically permitted third-party payment systems but imposed a 26% commission on those transactions. The companies also withheld certain features available only through their own in-app systems. According to the commission, this structure effectively forced developers to rely on the giants' internal payment tools. The investigation also identified instances where developers received no clear explanation for review delays or no estimate for when reviews would resume.

Apple argued in a statement to The Associated Press that it respectfully disagrees with the decision. The company maintained that its current practices comply with South Korean law. Apple stated it is evaluating its legal options. It noted that its in-app payment system provides secure transactions and protects users from fraud, risks that might increase with alternative payment methods. Google did not immediately respond to a request for comment regarding the fine.

The commission also accused Apple of charging South Korean developers higher commissions than developers in other regions. These higher rates applied from 2015 through January 2023. South Korea has scrutinized the business practices of foreign technology companies for several years. In 2021, the nation became the first country to enforce a law banning app market operators from mandating their own in-app payment systems for users.

The next step involves both companies deciding whether to accept the orders or pursue legal challenges. The commission’s ruling requires immediate changes to how developers can process payments in the South Korean market. Apple’s statement indicates it may contest the finding that its practices were unfair. Google’s silence leaves its response timeline unclear. The fines represent a direct financial cost to the two largest app distribution platforms in the world.