Wednesday, October 5, 2022

South Korea Raids Apple Offices

Florian Mueller (MacRumors, tweet):

On Monday (September 26), it was confirmed that Apple’s Korean headquarters in the city of Gangnam-gu were subjected to a dawn raid by the Korea Fair Trade Commission (KFTC), which is Korea’s antitrust authority.


The mobile game developers who brought the complaint that gave rise to this dawn raid argue that Apple charges even more than 30% to developers with respect to the revenues they generate in South Korea. Apple charges 30% of the price paid by end users, which includes value added tax (VAT) and, therefore, is 10% higher than the ex-VAT amount on which Google bases its 30% commission.


The KCC is investigating whether Apple, Google, and a local player are in compliance with last year’s amendment to the country’s Telecommunication Business Act, which requires app stores to allow third-party in-app payment services. Apple and Google (and possibly that local Korean player) don’t really do that: they act in bad faith by making it prohibitively expensive to use alternative payment services.

I wonder if something else is going on here, because I thought it was well known that Apple (contra Google) takes its 30% before subtracting the VAT.


2 Comments RSS · Twitter

It's hard to make the argument that Apple charges more than 30%, no matter if Apple takes their tax before or after the Korean government get their go. 30% is 30%

But I can see why the Koreans might want to get their share first.

From the developer perspective it makes no difference really. They still get double taxed. The socialist in me always smiles when I see free market enterprise charging three times as much for no benefits, than a state that provides plenty.

@Kristoffer Sure it makes a difference to developers. VAT is taken off the top right away, since it’s a consumer tax, not a company tax. So the Korean government does get it first. But Apple pretends to also be first by calculating its cut based on the gross price.

And that’s pretty crappy. Apple makes it sound like they’re getting 30% of the revenue, but they’re getting more. (Imagine a 30% VAT. Apple‘s alleged 30% cut would become half the revenue.)

Even worse, in some countries small developers would be excempt from VAT. But since it’s Apples big store, Apple has to pay it. Yet it comes entirely out of the developers share.

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