Toni Dimaano Tech 10.03.2022 04:Oct AM EDT

Apple's Seoul Office Raided Last Week by Korea Fair Trade Commission Investigators

The South Korean headquarters of Apple have been raided by antitrust officials after speculations that the Apple App Store is charging developers with more than they should.

Officials from the Korean Fair Trade Commission (KFTC) stormed into Apple's office in Gangnam-gu, Seoul, due to a complaint about overcharging commission rate, immediately investigating Apple's alleged abuse, Mac Rumors writes.

Apple Charges More Than It's Supposed To

Mobile game developers in Seoul have brought to the attention of the antitrust officials that there is an alleged overcharging in revenue, with Apple collecting three percent more than their baseline of 30%.

Naturally, developers need to pay Apple 30% of the revenues they get from their app, but they claim that Apple had been taking 10% more, inclusive of a Value Added Tax, which should not have been placed on them in the first place, The Mac Observer reports.

The Mac Observer adds that the same overcollection of commission rate also applies to small businesses or subscriptions under Apple.

Their collection of the additional 3% amounted to $240 million from 2015 to 2020 for every business they charge with 16.5% commission on the gross price plus VAT.

In France and Italy, where Apple also operates, it was reported that a 32.1% commission rate is collected, Turkey gets fined with 35.25%, while the United Kingdom pays up 31.5% of their revenue, Mac Rumors says.

Apple Insider reports that Chosun Biz, a local publication, stated that the Korean Mobile Games Association (KMGA) is alleging abuse of power on Apple's end, exhibited by driving out local competition and collecting tax.

Chosun Biz also adds that a complaint like this would not have normally gotten this level of attention, but with the nature of the business and the consideration of how big Apple is, this was considered a high-priority case by the national KFTC.

Investigations Are On-going And Apple Is 'Cooperating'

Apple is now being investigated by two offices in Korea. One of these is the Korean Communications Commission which speculates malpractice by violating in-app payment laws after the rejection of Google to comply, as Mac Rumors claims.

Another local publication called Foss Patents believes that Apple is not doing itself any good by making alternative payment services extremely expensive with a 26% commission on payments processed by other providers.

This means that if a developer uses a third party to process their payment in Korea, Apple will be charging for a cost that is twice as high as an in-app purchase.

In a statement, Apple's spokesperson claimed that they are 'fully cooperating' with KFTC regarding the investigation of the Apple tax.

"We look forward to explaining how the App Store has been a tremendous business opportunity for Korean developers," said the spokesperson, according to a report by CNet.

Foss Patents claims that the South Korean government did the right thing by amending the Telecommunications Business Act of Korea to curb the Apple Store's abuse, which has also been rampant in the United States.

Tags Apple