Google decided to make it mandatory for all the application suppliers to use an “in-app” payment system. It operates and processes payment inside Google Play, the platform Google uses for distributing and selling their applications, so that the company can easily process payments through a unified method. The payment system is beneficial where the users or buyers have difficulties refunding or processing transactions through complex phases of payments.
By enforcing the new payment method, Google intends “to maintain a stable utility of contents for users and to maintain successful business for inventers”. However, the new establishment also means that suppliers are then obligated to pay extra commission for each payment. The sudden announcement made the Korean application suppliers concerned since increasing prices of application and products seemed unavoidable to make up for the new charge.
Google estimated that only three percent of total Korean applications are to be affected by the new payment method. The “in-app” payment has been only applied to gaming applications in Google Play. On the other hand, App Store, which is an application supplying platform from Apple, has handled all the payments through its “in-app“ payment system regardless of the types of application. Even though many companies refused to use App Store platform due to the compulsory “in-app” payment system, App Store earned 27 million dollars more profits than Google Play in 2019. Considering the smaller number of registered applications and the larger amount of profit in App Store, the “in-app” payment system is considered a potent method of earning more money.
Many Korean application suppliers are concerned since Google Play has been the largest1) application distribution market in Korea. They expect the increased overall prices2) may make consumers to buy applications more reluctantly. This is not only a concern for the suppliers but also a concern for consumers. Consumers will be paying more and simultaneously will also be provided with less promotions such as “a free trial for a month”.
On October 23, legislation to prohibit application platforms from overcharging was passed. The executive director of Google Korea, Im Jae-hyun, said Google Korea will abide by the regulatory law once it becomes active, and that the company would reconsider the business model. The new payment method was planned to be implemented in October 2021, but many experts say it is uncertain if Google can charge extra commission.

1) In 2019, Google Play is reported to consist 63 percent of overall Application transactions.
2) App Store is currently charging 30 percent commission, whereas Google Play currently does not charge any but tries to introduce 30 percent commission payment system, too.