'Google to reap up to W150b in additional profit a year from app store fees’

A logo of the Google Play Store is shown in this undated image provided by the company. (Google Play)

Google’s revenue from app store fees in South Korea could increase by more than 150 billion won a year when the company’s billing policy changes take effect later this year, a local lawmaker said Tuesday.

In September last year, Google announced that the company would enforce a 30 percent commission on all in-app purchases of digital content from its app store, starting in October, 2021. Google has so far charged fees on game content sales only.

Rep. Park Sung-joong of the opposition People Power Party projected that the new billing policy would deliver the US internet giant an additional income of 156.8 billion won based on 2020 sales data on Google Play Store, collected by the Ministry of Science and ICT.

The combined revenue of the top 246 local developers selling their content on the Google platform was estimated at over 5 trillion won through last year, Park said, citing the ministry data.

The 246 firms accounted for over 75 percent of the country’s mobile app sales between September and October 2020.

If their sales remain the same this year, Google will collect 88.5 billion won more in commissions. Should their sales continue its current growth trend, Google’s income from fees could rise up to 54.5 percent, or 156.8 billion won, the report added.

“After Google’s new billing policy changes take place, consumers here will be the greatest victims,” Park said.

According to the ministry’s survey that allowed multiple responses, around 50 percent of large-sized developers said that they would hike up prices of their in-app products to cope with Google’s policy changes.

Four in 10 small and mid-sized developers said they would seek alternative payment methods, while 27 percent said they would switch to other app stores. Only 28.5 percent of small and mid-sized developers polled said they would increase prices of their products on the Google Play Store.

Park stressed that Google, which holds around 70 percent market share in South Korea, should introduce measures that could alleviate the burden on small and mid-sized developers here.

By Shim Woo-hyun (ws@heraldcorp.com)