Google Fined $177M by South Korea Antitrust Regulator

Google Fined by Korea Fair Trade Commission for Android Market Dominance

The Korea Fair Trade Commission (KFTC) announced on Tuesday a $177 million fine levied against Google. This penalty stems from allegations of abusing its dominant position within the Android operating system (OS) market.

Restrictions on Customization

According to the KFTC, Google has actively suppressed competition. This was achieved by preventing South Korean smartphone manufacturers, such as Samsung Electronics and LG Electronics, from freely customizing the Android OS. These restrictions were enforced through Google’s Anti-Fragmentation Agreements (AFA).

The AFA stipulations prohibit smartphone developers from creating or installing "Android forks"—essentially, modified versions of the Android OS.

KFTC’s Corrective Measures

The KFTC has issued an order prohibiting Google LLC, Google Asia Pacific, and Google Korea from requiring local smartphone developers to adhere to the AFA. Furthermore, modifications to the existing AFA terms are mandated.

This new regulation extends beyond mobile devices. It will apply to all Android-powered smart devices, including smartwatches and televisions, within South Korea.

Google’s Response

Google maintains that its Android compatibility program has fostered innovation among Korean mobile operators and software developers. This, they argue, has resulted in an improved user experience for consumers.

“The KFTC’s decision disregards these benefits and will negatively impact consumer advantages,” stated a Google spokesperson. The company intends to formally appeal the KFTC’s ruling.

Investigation Timeline and Market Share

The KFTC initiated its investigation into Google’s anti-competitive practices in the OS market back in July 2016, as confirmed by a KFTC representative.

The KFTC’s announcement reveals that Google’s global mobile OS market share, excluding China, has risen dramatically. It increased from 38% in 2010 to 97.7% in 2019.

Impact on Device Launches

Google’s AFA has also reportedly hindered the launch of new devices from other tech companies. Examples cited include Samsung’s smartwatch in 2013, LG Electronics’ LTE smart speaker in 2018, and Amazon’s smart TV in 2018.

Ongoing Investigations and New Legislation

South Korea’s antitrust watchdog is currently investigating three additional cases involving Google. These concern the Play Store app market, the billing system, and the advertisement market.

Concurrently, South Korea’s new “anti-Google law” came into effect on September 14th, as detailed in a press release from the Korea Communications Commission.

Curbing In-App Payment Practices

Passed in late August, this legislation aims to prevent large technology companies, including Google and Apple, from mandating their proprietary in-app payment services and associated commissions on app developers.