[IT큐레이션] Google’s Finding Accomplices…Who Has the Right to Anger

[이코노믹리뷰=최진홍 기자] It is an atmosphere that the toll controversy between Google and Apple is spreading into a’jamjami war’. In the midst of this, ISPs and CPs, including telcos and app store platforms, as well as’platform + contents’ operators, are getting hotter. It literally means’everyone is angry.’

Some people have framed this debate over the’out-of-the-box family fight’. However, what is important is the analysis that the current dispute is not a constant family quarrel but a conflict of emotions accumulated for a long time. Furthermore, in fact, there is no one player who should be purely outraged in the debate right now.

Purnima Kochikar Head of Global Business Development at Google Play. Source = Capture

In-app payment fee

The start of the case is the extension of the Google In-App payment fee.

On the 29th of last month, Google confirmed a policy to charge a 30% fee for in-app payments for the digital content of apps that have been launched on Google Play. Purnima Kochikar, head of global business development at Google Play, said, “We will raise the in-app payment fee for digital content to 30%.” “Existing apps are until September 31, 2021, and new apps are January 2021. “We give you a grace period until the 20th.”

It was a time when Apple and Epic Games clashed over similar issues in the global market. However, in the case of Korea, when Android’s market share was overwhelming, when it became known that Google is raising fees to 30% for digital content, considerable backlash came out.

In that extension, Google overturned the inside of domestic CPs by saying, “Everything is the customer’s free choice”, “There is a One Store and a Galaxy Store, so if we don’t like our policy, should we choose Android?” I did not forget to put it. Of course, in the case of Apple, it is’forced’ to enter its app store and do business, but Google gives it its own choice. Nevertheless, considering the influence of Android, there is a saying that it is’excessively irresponsible’.

The situation got serious. The Korea Startup Forum said, “The in-app payment method has advantages in terms of user convenience, but the fee is at the level of 30%, so it is 4 times less and 30 times more than external payment methods such as credit card, account transfer and mobile phone payment provided by PG. It’s about expensive,” he said. “Even so, the fee rate is too high, but it is a problem in itself, but it is a bigger problem for app market operators, which have a dominant influence on the market, to force a specific payment method.” The Internet Enterprise Association strongly opposed it by submitting a report of violation of the Telecommunications Business Act.

Politics also moved. The Ministry of Science and ICT, the Korea Communications Commission, and the Fair Trade Commission all expressed their stance that they will not be left behind over the extension of Google’s in-app payment fees. Poured out.

A scene in which domestic politicians and ICT companies are angry with the global company Google, and argue that countermeasures should be prepared. This atmosphere was fueled by Google’s delay in expanding in-app payment fees in India due to opposition from local governments and startups.

However, this is a sufficiently predictable scenario.

From left, Jeff Bezos, Amazon CEO, Tim Cook, Apple CEO, Sunda Pichai, Google CEO, and Mark Zuckerberg, Facebook CEO.  Source = Newsis
From left, Jeff Bezos, Amazon CEO, Tim Cook, Apple CEO, Sunda Pichai, Google CEO, and Mark Zuckerberg, Facebook CEO. Source = Newsis

Splitting Big Tech

While controversy over the expansion of Google in-app payment fees was growing in Korea, pressure from the US government on big tech companies was at its peak in the US across the Pacific Ocean. The Democratic Party of the United States, who directly suffered from fake news at the time of the last election, and Wall Street and Silicon Valley were considered symbols of victory in the free economy, but the Republican Party did not hide its bitter sentiment against big tech companies after President Trump. A joint attack began to take place.

The US House of Representatives immediately issued a report on the 6th (local time) and put a brake on the abuse of market dominance by big tech companies such as Amazon, Apple, Facebook, and Google. The 449-page report released by the anti-monopoly subcommittee under the House Judiciary Committee is concerned about the excessive market dominance of each big tech company, while also stating that the platform needs to be separated if necessary. The US Department of Justice has even begun to argue that Google should sell Chrome separately.

The European Union (EU) is also conducting sales and market share surveys of Silicon Valley companies through related departments, and is making a move to select special management targets soon. As an extension of that, the trend of’big tech companies that use data to the fullest can’t be left unattended’ was prevalent in the United States.

Attacks by Europe and the United States against big-tech companies have different motives (unlike the United States, Europe is afraid of securing domestic data by a private company in the United States Silicon Valley), but the industry saw it as a certain’forecast’. This is a sufficiently predictable scenario, with Senator Elizabeth Warren publicly asserting the validity of’split big tech companies’ last year.

The start of the’unexpected reversal’ began when the US Department of Justice filed a complaint against Google’s unfair conduct in Washington DC federal court on the 20th (local time). The preloaded app was a problem. It is pointed out that while Google runs Android, it preloads its app on devices of hardware alliances such as Samsung Electronics, and in return has provided billions of dollars to hardware allies as well as telecommunications companies.

The unexpected spark here is the controversy over the honeymoon, that is,’Jamjami’. There are two main things.

First of all, it is the possibility of a honeymoon between Google and Apple. The U.S. Department of Justice is also paying attention to the possibility of a honeymoon between Apple and Google, the two largest mobile operating systems. Right now, in 2018, after Google CEO Sunda Pichai and Apple CEO Tim Cook met to discuss the two companies’ cooperation plans, Google paid 11 billion dollars to run its apps on Apple Safari, and thanks to that, Google paid half of all search traffic. Opened the way to secure the iPhone.

The U.S. Department of Justice, which took issue with this, is considering the honeywall between the two companies as serious as the problem of market oligopoly.

Next, the U.S. Department of Justice takes over the complaint and focuses on the flow of funds between Google and hardware allies and carriers. First of all, from the manufacturer’s perspective, it was argued that Google paid a significant amount of money in exchange for deploying its preloaded apps on devices of hardware allies such as Samsung Electronics. Amid criticism that the pre-loaded app itself narrows customers’ options, there is a new criticism that manufacturers such as Google as well as Samsung Electronics are responsible for it. This is the moment when the’Anti fork agreement’ established by the European Commission (EC) in 2016 rises to the surface.

The important thing here is that the responsibility is put on the hardware alliance as well as the carriers.

In fact, the U.S. Department of Justice insisted that Google is working closely with both the hardware alliance and telecommunications companies to implement its preloaded app roadmap. In other words, it is a problem consciousness that Google is not’forcing’ pre-loaded apps to hardware allies or telecommunications companies with the market oligopoly as a weapon, but is doing’jampjami’ together. This makes a big difference. In the former case, manufacturers and telecom companies can be seen as victims, but in the latter case, manufacturers and telecom companies become Google’s’accomplices’ who fully enjoy the benefits of the market oligopoly.

Sunda Pichai, CEO of Google.  Source = Newsis
Sunda Pichai, CEO of Google. Source = Newsis

Internet industry vs telecommunication industry

The complaint submitted by the U.S. Department of Justice on the 20th (local time) is premised on the premise that Google is holding hands with “a lot of accomplices”, beyond fear of Google’s market oligopoly. Of course, Google’s market oligopoly isn’t a “crime,” but considering the customer’s options and constitutional value, the problem becomes even more serious. In the extension of that, a kind of’review’ of’Google’s accomplice’ begins to take place in Korea. It is the criticism of the news agency.

Democrat Yoon Young-chan, a member of the National Assembly Science and Technology Information Broadcasting and Communication Committee, a former Naver executive, said that Google and telecommunications companies signed a kind of gamjami contract at a state audit on the 23rd. I made a claim to that effect. It is similar to the contents of the collection of the US Department of Justice on the 20th (local time). It is a disclosure that Google has signed contracts with manufacturers and carriers for Android monopoly and is sharing related revenue.

The day before, Congressman Lee Young, the power of the people, made a similar disclosure, and the controversy arose more sharply. In particular, Rep. Lee Young drew attention by claiming that domestic game companies are already paying 30% of in-app payment fees, and 15% of them are from the telecom companies. Rep. Lee emphasized, “The fee that credit card companies and payment agencies (PG) companies take is around 2.5%,” and “Telecommunications companies that take 15% of profits get excessive profits.” It is pointed out that while Google is tyranny with the market oligopoly as a weapon, it is making some kind of contract with manufacturers, especially telecommunications companies, to share a large portion of its sales.

The Internet industry, which has consistently criticized Google’s market oligopoly, immediately agreed. On the 23rd, the popular association and Cospo made a joint statement, “Through the data submitted by Google Korea to Rep. Lee Young at this state audit, the 3 telecom companies are sharing 15%, which is half of the 30% in-app payment fee, as a payment method. “It was confirmed,” he criticized, saying, “It was confirmed through this state administration that the three Korean telecom companies and mobile phone makers are involved in the in-app payment enforcement policy of Google and Apple.”

They further said, “Popularity Association and Cospo once again express a strong regret for the reinforcement of the market dominant position of Google and Apple and the actions of the three telecommunications companies and mobile phone manufacturers who cooperated. “I urge a close examination of the government and the expeditious legislation of the National Assembly.”

The most important keyword here is the number ‘15%’. This is because, depending on the view, it can be a very sensitive issue, depending on the view that’is it true that telecom companies take 15% of sales with Google or in a short time.’ If true, not only manufacturers, but also telecommunications companies will fall into’ministers’ hitting the domestic Internet industry for Google’s market dominance.

KTOA, which belongs to carriers such as SK Telecom, KT, and LG Uplus, immediately launched a counterattack. KTOA said, “It is not true that the popular association claims that the mobile operator takes 15% of the total payment amount, and the proportion of mobile phone payment fees for mobile phone companies is around 3-4%,” said KTOA. “The proportion of mobile phone payments among Google app payments is estimated to be 20-30%, It is similar to that of overseas,” he refuted.

Furthermore, KTOA drew a line saying that telecommunications companies had not cooperated with the expansion of the Google and Apple market influence, and argued that “the issue of the dominance of overseas platform companies is an issue that all participants in the ecosystem, such as telecommunications companies and Internet companies, must gather strength and wisdom.” Rep. Young-Chan Yoon and Rep. Lee Young-chan refuted the criticism raised by the domestic internet industry, denied securing 15% commission sales, and furthermore, it is a nuance that domestic companies do not have to fight the house over the controversy that began with the expansion of Google in-app payment fees. .

Source = Capture
Source = Capture

Who is right? Information asymmetry

As argued by Yoon Young-chan and Lee Young-chan, as well as Kospo and Kospo, is the revenue earned by acting as Google’s accomplices really 15%? In this regard, a truth battle takes place, and some media criticize it as ‘15% sales revenue is fake news’, but to be precise, it is more correct to view this data as’unverifiable’ in the current situation.

Currently, the exact data is not disclosed, but some people say that mobile phone micro-payment fees account for about 50% of Google Play fees, up to 30% for cultural gift certificates, and other simple payments at the low 10%. Credit cards account for around 3%. Here, it is calculated that the mobile phone micro-payment that the carrier takes is 15% of the 30% Google In-App payment fee. It is in line with the claims of internet companies.

However, KTOA insists that it is 3-4%, not 15%. Why did this data come out? This is because they look at the parent fraction differently. In fact, in the telecommunications industry, out of Google’s total in-app payment fees, the carrier takes mobile phone payment (DCB) based on telecom billing, which is said to be up to 30%. Here, what the carrier takes is ‘15%’ (although it is a coincidence, KOTA calculates the fee and does not indicate this intermediate step). When calculated in this way, the proportion of fees taken by carriers out of 30% of the total in-app payment fees is 3-4%.

What’s important here is that most of the information about how much of Google’s fees are paid by the mobile operator, what it is for, and what the weight is. It is typical information asymmetry. Even looking at the controversial keyword ‘15%’, it appears in both arguments, so it is presumed that someone interpreted this passage and pulled the wrong data, but it is impossible to derive certain data in the current situation.

The telecommunications industry has this data, but the telecommunications industry is not fully disclosing the data due to trade secrets. “We were estimating that the telecommunications company was taking 15% of the Google In-App payment fee, and when a related story came out, I made a statement, thinking that it was verified.” “Who is right? You’ll find out if you release it,” he said.

Source = Capture
Source = Capture

Home fight? An upcoming quarrel

The recent controversy unfolding over’who is Google’s accomplice’ is an atmosphere that sparks a firefight between the Internet and telecommunications industries, while issues related to manufacturers are slightly averted.

Some say that the Google controversy was sparked by an inexhaustible family fight, but this is not true. In fact, both sides have been fighting unstoppable until now, not only for personal information protection controversy but also for the recent network fee dispute. In particular, in the dispute over network usage fees, both sides did not hesitate to compete with sharp force, and domestic CPs such as Naver and Kakao suddenly cooperated with global CPs such as Google and Netflix, which they criticized as’the main culprit of the tilted playground’ in the process. There was also an onslaught that the usage fee was too high. The quarrel between the Internet and telecommunications industries was not yesterday and today, and the dissatisfaction and disbelief have accumulated step by step. It is correct to see that this atmosphere exploded in the Google crash.

Even the controversy this time twisted anew. If, as the Internet industry claims, telecommunications companies become accomplices of Google and share profits and play a part in the conquest of Android, it is because Naver and the three telecommunications companies cannot clearly explain the situation of the one store created. Naver is the chairman of the Popularity Consultation, which made a joint statement with Cospo in this Google incident.

Eventually, information asymmetry, accumulated dissatisfaction, and even wires are twisted into a’muddy fight. And each player is confronting each other with hatred, saying’our claim is correct’.

However, what is important here is that, at least in the platform business, both Internet and telecommunication companies have their own original sins. In fact, the motive of the controversy is too strong in the case of a telecommunication company. From the original sin of hearing’Wifi’s Shield’ to prevent such an atmosphere from entering the country for a while, despite the opening of the mobile era, even after the mobile era, telecommunications companies did not disclose accurate information but only’tightened’, and this time they were criticized as an accomplice of Google. have.

The same is true of large Internet companies such as Naver and Kakao. These are CPs that fight ISPs, telecommunications companies, but in their own ecosystem, they play a role as a platform. In the process, they are collecting huge fees as well as Google. If so, is the right of anger in a startup while being a pure CP? Unfortunately, the aftermath of Google’s in-app payment fee expansion corresponds to the top 1% of sales, and even if Google’s policy is in effect, the fee is only for the distribution of paid digital content.

It cannot be seen that everyone has original sin, and everyone has the right to anger. In the end, the answer is one. ‘Data Disclosure’

It is the last weapon to stop this damn fight.

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