South Korea Fines Google $177 Million Over Anti-competition Practice

South Korea Fines Google $177 Million Over Anti-competition Practice

Two weeks after South Korea’s parliament enacted a law to checkmate monopolistic practices of Apple and Google, the country’s competition watchdog has fined Google 207.4 billion won ($176.8 million) for abuse of its market dominance.

The Korea Fair Trade Commission (KFTC) said Tuesday it handed Google the fine for abusing its dominant position in the smartphone market and forcing smartphone makers to use its Android operating system on their devices.

It is the latest in a number of antitrust actions taken against the tech giant in recent weeks, amidst growing calls to keep the big players in the tech industry in check.

Google was accused of using its dominant position to block smartphone makers like Samsung from using operating systems developed by rivals.

“We expect the latest measures will help set the stage for competition to revive in the mobile OS and app markets. This is also expected to help the launch of innovative goods and services in smart device market,” the KFTC said in a statement.

Investigation into Google’s anticompetitive activities started in 2016. The KFTC said the web search giant’s action stifled competition by demanding that smartphone makers accept an “anti-fragmentation agreement” (AFA) when they sign key contracts with Google over app store licenses and early access to OS, according to South Korea’s Yonhap news agency.

The AFA prohibits device makers from installing Android forks, modified versions of Android OS, and also from developing their own Android forks.

The KFTC said the practice has helped Google to dominate the mobile market and undermine innovation in the development of new OS for smart devices, it thus ordered Google to take corrective measures.

AP reported KFTC official Kim Min-jeong saying the fine is provisional and currently based on Google’s revenue in South Korea from 2011 to April 2021. The final fine, due to be announced later this year, could be higher on account of the revenue generated between April and then.

The regulator is still investigating separately three more cases related to Google’s alleged anti-competitive activity, according to Yonhap.

The three cases being investigated is whether Google forced mobile game applications to be released only on its Play Store. The watchdog is also probing Google’s alleged unfair practice over the sale of digital rights, and whether Google’s new billing policy has harmed market competition, according Yonhap.

In addition to the fine, the KFTC ordered Google to stop implementing the anti-competitive contracts under AFA in the future and make corrections to the existing ones.

The fine is believed to be the largest in South Korea’s history. But a Google spokesperson told Forbes the company intends to appeal the decision and believes “Android’s compatibility program has spurred incredible hardware and software innovation.”

Last month, South Korea’s national assembly approved a legislation that will limit the monopolistic practices of Apple and Google in their app stores, making the Asian country the first nation in the world to take such a regulatory step.

The new law, which is an amendment to the Telecommunications Business Act, bars app market operators from abusing their market positions by forcing certain payment systems on mobile content businesses.

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