South Korea Fines Apple $15.5 Million Over App Store Rules

South Korea’s media regulator fined Apple 20.8 billion won ($15.5 million) on Wednesday for violations in its App Store, part of a combined 63.7 billion won ($47.6 million) penalty against Apple and Google. The Korea Media and Communications Commission (KMCC) told the two companies to permit South Korean developers to include external payment links in apps and to refine their app review processes. Google’s fine was 42.9 billion won ($32 million).

The regulator said the companies misused their market power by pushing local developers to use their own payment systems and by delaying app reviews without justification. This is the first time the regulator has enforced the 2021 revision to the Telecommunications Business Act, which bans app store operators from requiring particular payment methods and from dragging out app reviews, the KMCC said. According to the commission, the two companies charged a 26% fee and placed extra limits on third-party options, which in practice pushed developers toward their own in-app payment systems. Even though the firms permitted outside payment systems in apps on paper, the commission said they kept certain features exclusive to their own systems, which effectively left developers with no real choice but to use those built-in payment systems.

The KMCC also determined that from July 2015 to January 2023, Apple imposed larger commissions on South Korean developers than on those in other countries. Apple calculated its 30% commission based on prices including value-added tax for South Korean developers but based on prices excluding VAT for overseas developers, which the regulator said was discriminatory. Apple must take measures to prevent such discriminatory commission practices from recurring.

Both companies must also revise their app review procedures because they delayed reviews without clearly explaining the reasons for delays or when reviews would resume, the commission said. The Korea Herald reported that the companies have one month after getting the orders to file compliance plans, and three months to implement the changes. The KMCC does not intend to bring criminal complaints and plans to issue written decisions next month, according to the same report. Kim Jong-cheol, the commission’s chairman, said he hopes the measures “will mark a turning point, bringing meaningful changes to the market that app developers and end users can actually feel”.

Apple told Reuters it “disagreed with the decision and was evaluating options in accordance with South Korean laws,” and added that it “has worked with outside developers to enable innovation through its App Store”. The Associated Press reported that Apple said it “respectfully” disagrees, stating that its practices already meet South Korean law and that it is weighing legal options; the company said its in-app payment system provides secure transactions and shields users from predatory tactics and fraud. Google did not immediately respond to a request for comment, Fortune reported.

In 2021, South Korea became the first nation to put into effect a statute that bars app marketplace operators like Google and Apple from compelling users to pay through the companies' own systems. The regulator spent years investigating the companies for allegedly violating that law. Similar regulatory pressure has led Apple to introduce alternative app distribution and payment options in Brazil and Japan, and to overhaul its App Store fees and business terms in the European Union, according to 9to5Mac.