Apple Offices in South Korea Raided Over Complaints of 33% App Store Commission: Report
South Korea’s antitrust regulator, the Korea Fair Trade Commission (KFTC), raided Apple’s headquarters in the country earlier this week over allegations that the company is charging more than its sticker 30% commission — 33%, to be exact — on purchases made through the App Store.
Local media first reported the raid on Monday, with Foss Patents covering it on Friday. The complaint that instigated the raid was brought by a collective of mobile game developers who alleged that Apple’s App Store commissions exceed 30%.
According to the Foss Patents blog’s extensive analysis, the complaint holds merit because Apple effectively collects a 33% App Store commission in South Korea.
Apple’s policy is to charge developers a 30% commission on the price paid by end users, which includes value-added tax (VAT). In South Korea, VAT amounts to 10% of the purchase value. Apple’s commission, therefore, ends up being 33% of the actual value of the purchase (30% of the 110% paid by customers).
For smaller developers enjoying a 50% relaxation on App Store commissions, that comes out to 16.5% instead of the advertised 15% on every transaction.
In comparison, Google bases its commission on the sticker price of the purchase, excluding VAT, and not how much users end up paying. That being the case, developers are strictly charged the 30% standard on Play Store purchases.
Apple’s overage in South Korea reportedly totalled approximately 345 billion won ($240 million USD) in the period from 2015 to 2020.
App Store commissions are similarly affected by VAT in other countries. Developers end up paying Apple 35.25% in Turkey, 32.1% in France and Italy, and 31.5% in the UK as a result.
Apple was already staring down the barrel of a Korea Communications Commission (KCC) investigation over suspected violations of in-app payment law on the App Store. Now, the iPhone maker is under investigation by two South Korean regulators.
South Korea has been on a crusade against Apple’s market dominance and iron grip on the App Store. Last year, South Korea became the first country to pass a law requiring that app store operators like Apple allow developers to use third-party payment systems.
Apple announced plans to comply with the law in January, and the company started allowing alternative payment solutions on the South Korean App Store in June. Even so, there are concerns Apple has made using third-party payment services prohibitively expensive by still charging developers who choose to use them a 26% commission.