It is reported today that the Korean antitrust agency, Korea Fair Trade Commission, has raided Apple’s Korea Offices after a complaint was raised by developers that it is charging them over the standard 30% App Store commission rate.
According to FossPatents, the raid occurred due to an ongoing investigation in the country into Apple’s alleged abuse of market power.
Apple’s Alleged 33% Developers Commission Charges
The raid was prompted by a complaint filed to the agency by mobile game developers who argued that Apple charges more than the typical 30% commission rate for purchases made in the App Store.
As noted by FossPatents, Google bases its 30% commission on a price that doesn’t include value-added tax (VAT), whereas Apple charges 30% of the price paid by end consumers, which includes VAT. This makes Apple’s fee 10% more than Google’s fee. Thus, rather than the advertised 30% rate, Apple is taking 33% (30% of 110%).
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Because Apple charges the commission on the gross price, which includes VAT, developers in Korea are charged 16.5% instead of the 15% rate that is applied to small businesses or subscriptions in the first year. According to reports, the extra 3% translated into almost 345 billion won between 2015 and 2020.
Apple’s Initial Investigation with Korean Agencies
With this development, two Korean government agencies are now investigating the tech giant over alleged abuse of market power.
The Korea Communications Commission stated in August that it had investigated Apple, Google, and One Store since May 17 to see if they had broken any in-app payment regulations and had come to the conclusion that all three businesses may have. The KCC could issue corrective orders and impose fines as high as 2% of the typical annual revenue from pertinent business operations if the new investigation reveals misconduct.
Apple declared in January that it would abide by a new regulation in South Korea that forbids owners of app stores from pushing developers to use their in-app purchase platforms. The modification took effect in late June, opening the door for developers to provide other payment methods in South Korea.
FossPatents contends that by making using alternative payment methods unaffordable, Apple is operating in bad faith. Developers utilizing a third-party payment processor in Korea would pay a total cost that is roughly twice as high as if they used Apple’s in-app purchases since Apple charges a 26% commission on payments processed by other service providers. Follow TechGenyz for more updates.