Apple judged to be forcing unfair transactions with Spotify… First fine imposition policy
Korea’s Korea Communications Commission also imposed fines on Google and Apple last year… Currently reviewing opposing opinions from both companies
Apple is at risk of being fined KRW 700 billion by the European Union (EU) for violating anti-monopoly laws. The EU believes that Apple’s policy of forcing in-app payments (app store internal payments) for apps in its App Store while prohibiting external (third-party) payments and promotions constitutes a violation of the European Digital Markets Act (DMA). .
This move by the EU authorities is expected to have an impact on Korea, which is currently preparing to impose sanctions on Google and Apple on similar charges. In 2021, our National Assembly enacted the ‘In-App Payment Compulsory Prevention Act (Amendment to the Telecommunications Business Act)’ for the first time in the world with the purpose of preventing app market operators’ ‘abuse of power’ in payment fees. The Korea Communications Commission is considering imposing fines worth tens of billions of won on Apple and Google based on this law.
◆EU likely to impose a fine of 500 million euros on Apple… Music service ‘forced in-app payment’ unfair judgment
According to foreign media such as the Financial Times on the 19th, the EU competition authorities reportedly decided to impose a fine of 500 million euros (about 719.1 billion won) on Apple. This is because it is judged to have committed monopolistic practices such as enforcing unfavorable policies on the music streaming service ‘Spotify’ through its dominance of the ‘App Store’, its app market.
Spotify is one of the biggest competitors of Apple’s music streaming service, Apple Music. Spotify claimed that in 2019, Apple increased the monthly subscription fee when it implemented a fee policy within the App Store. After conducting a long-term investigation after Spotify raised the issue, the EU concluded that Apple had imposed unfair trading practices on its competitors.
Initially, Spotify and others were informing users that they could sign up for apps or services not only within the App Store (in-app) but also through other external methods. However, Apple viewed this method as a means of avoiding App Store fees and banned so-called third-party payment methods. The company implemented its own policy of deleting outlinks to other payment methods in the App Store and even prohibiting the promotion of other payment methods.
Apple’s mandatory in-app payment policy is widely applied to most paid apps and services, but this EU investigation was conducted specifically on music streaming services. The EU concluded that Apple’s actions of restricting competitors’ services and promotions through mandatory in-app payment policies were unfairly advantageous to Apple Music.
With the implementation of DMA in Europe, big tech companies, including Apple, will be subject to fines of up to 10% per year if they violate the law through monopolistic behavior. Accordingly, Apple decided to withdraw its mandatory in-app payment policy only within Europe and allow third-party payment methods other than the App Store. Nevertheless, the EU is imposing fines on Apple for its past actions.
◆Korea Communications Commission fines Google and Apple KRW 68 billion for violating the ‘Act on Compulsory In-App Payment Prevention’… Resistance from both companies continues
Before Europe, one of the biggest markets for Big Tech, took a hard-line response, Korea was already pushing for sanctions against Apple and Google last year.
The Korea Communications Commission has conducted a fact-finding investigation into unfair practices such as forcing specific payment methods by app market operators since August of last year. As a result, in October last year, we notified Google and Apple of corrective action plans and announced that we would also pursue the imposition of fines.
The fine imposed by the Korea Communications Commission is up to 68 billion won, including 47.5 billion won for Google and 20.5 billion won for Apple. As a result of fact-checking, the Korea Communications Commission determined that app market operators Google and Apple violated prohibited acts under the Telecommunications Business Act by abusing their trading positions to force a specific payment method and unfairly delay app review. Google and Apple’s in-app payment and in-app third-party payment commission rates range from 26 to 30%.
In particular, the Korea Communications Commission considered Google and Apple’s enforcement of specific payment methods to be a serious issue that is highly likely to undermine the purpose of the law revised in September 2021 to promote fair competition in the app market.
After the Korea Communications Commission’s decision, Google and Apple immediately began protesting. Google foreshadowed its response, saying, “The Korea Communications Commission has notified the ‘draft’ of corrective measures, and Google will closely review it and submit an opinion.”
Apple also issued an unusual position statement at the headquarters level, refuting, saying, “We do not agree with the factual findings announced by the Korea Communications Commission, and we believe that the changes applied to the App Store are in compliance with the Telecommunications Business Act.”
As both Google and Apple are taking hard-line responses, the size of the fine has not yet been confirmed. The Korea Communications Commission also announced that it would collect opinions from business operators before imposing fines, and after the announcement in October last year, Google and Apple are known to have sent a huge amount of supporting data to the Korea Communications Commission. The Korea Communications Commission is currently reviewing the data they sent.
An official from the Korea Communications Commission said, “We have sent opinions on corrective measures (such as fines) to Google and Apple, and the business operators have sent us their opinions.” He added, “It is difficult to reveal the content of the opinions, but we have sent a large amount of opinions and are now responding to them.” “A review is in progress,” he explained.
As the Korea Communications Commission is still reviewing the opinions of the Korea Communications Commission and Google and Apple are also opposing the imposition of fines, it is highly likely that the fine amount of 68 billion won will change. Some are even predicting that Google and Apple may file an administrative lawsuit to withdraw the fines. If administrative litigation proceeds, the imposition of fines, a type of administrative disposition, may also be suspended. If the lawsuit prolongs, it cannot be ruled out that the legal battle could continue for up to several years.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.