Lawmakers incapable of addressing Netflix, Google issues in audit

20-Oct-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

The Science, ICT, Broadcasting and Communications Committee has failed to summon the heads of Google Korea and Netflix Services Korea to appear as witnesses in this year’s annual government audit for questioning over their “controversial business practices” in the country.

The committee earlier requested Nancy Mable Walker representing Google Korea and Reginald Shawn Thompson of Netflix Services Korea to attend the audit as witnesses but both declined to take part citing their overseas residence status.

“Once arriving in the country, Thompson has to stay in mandatory quarantine for two weeks and another two weeks while returning to the US, which has a high possibility to cause a snag in company operations so we delivered the message (to the committee),” a Netflix Korea official said.

Lim Jae-hyun, executive director of Google Korea, will take Thompson’s place as a witness during the October 22 audit, while Netflix Services Korea is scheduled to send a team leader.

With the absence of top management, many industry watchers believe it will be difficult to address key issues surrounding the two firms during the government audit.

Google has gained negative attention after it announced it would require all app companies on its Google Play store to use its in-app payment system, from which the store takes a 30 percent cut of all purchases.

The 30 percent fee has been applied to only local game companies so far, but the company is set to extend it to all apps by October next year. If an app developer decides to use a different payment system, there are concerns that Google Play could effectively ban their apps from the store.

Netflix is currently engaged in a lawsuit against SK Broadband arguing it should not have to pay for network use, while local players such as Naver and Kakao have been paying annual fees in the tens of billions of won to domestic local internet service providers (ISPs). Netflix only pays network use fees in the United States and France.

All these controversial issues were scheduled to be the focus of this year’s audit, but the absence of key witnesses makes it difficult.

In last year’s government audit, Google Korea CEO John Lee attended on behalf of the company head, but failed to answer key questions citing his unawareness of the issue.

Many industry officials believe that even if Thompson and Walker take part in the audit, it will be difficult for the Korean government to slap additional taxes on Google and Netflix for their operations within the country, as they are foreign firms with headquarters located abroad.

“Lawmakers could scold them all they want but the National Tax Service and the Fair Trade Commission do not know how to tax either Google or Netflix as their headquarters are located in the US,” a senior industry official said. “So Google is not afraid of the escalating situation such as its in-app payment policies as all their key servers are abroad.”


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