Google fined $177 million in South Korea
A South Korean antitrust regulator has fined Alphabet Incorporated’s Google $176.64 million for blocking customized versions of its Android operating system (OS), but Google is gearing up to challenge the fine.
This is the second setback for the US tech giant in less than a month, following a US$593 million fine in France recently for using news content without proper negotiation with publishers and news companies.
The Korea Fair Trade Commission (KFTC) ruled that terms Google has with device makers amounted to the abuse of Google’s dominant market position that restricted competition in the mobile OS market.
Google’s mobile operating system powers more than 80 percent of smartphones around the world.
But Google said in a statement it intends to appeal. It said the ruling ignores the benefits offered by Android’s compatibility with other programs and undermines advantages enjoyed by consumers.
The fine, one of the highest levied in South Korea over abuse of market dominance, came on the same day an amendment to South Korea’s Telecommunications Business Act – popularly dubbed the “anti-Google law” – came into effect.The law now bans app store operators such as Google from requiring software developers to use their payment systems – a requirement that effectively stopped developers from charging commissions on in-app purchases.
A US district court last week gave a similar ruling against Apple quashing an App Store rule that compelled developers to receive payments only via Apple’s payment platform so Apple could charge a 30% fee.
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KFTC said Google hampered competition by making device producers abide by an “anti-fragmentation agreement (AFA)” when signing key contracts with it regarding app store licenses.
Under the AFA, manufacturers could not equip their handsets with modified versions of Android, known as “Android forks”. That has helped Google cement its market dominance in the mobile OS market, the KFTC said.
The watchdog banned Google from forcing manufacturers to sign AFA contracts and ordered that it modify existing ones.The new measures from the KFTC are intended to spur competition by freeing companies to create so-called Android forks without fear of punitive measures from Google.
The regulator said the fine could be the ninth-biggest it has ever imposed.
In 2013, Samsung Electronics Co Ltd launched a smartwatch with a customized OS, but switched to a different OS after Google regarded the move as an AFA violation, KFTC said.
Samsung Electronics declined to comment.
Korean regulators have stepped up scrutiny of tech giants this year, including local players. Kakao Corp’s group of companies lost more than $16 billion of market value at one point this month after prominent lawmakers called the nation’s biggest messaging and social media service “a symbol of greed”.
Consumer protection has been a focal point of measures designed to curb the market control powers of the largest companies, especially in developing spheres such as fintech services.
