(2nd LD) Google fined 207 bln won for anti-competition practice in mobile OS market

(ATTN: UPDATES with more details in paras 15, 21-22)
By Kim Soo-yeon and Chae Yun-hwan

SEOUL, Sept. 14 (Yonhap) -- South Korea's antitrust regulator said Tuesday it has decided to fine global tech giant Google 207.4 billion won (US$176.8 million) for pressing smartphone makers into only using its Android mobile operating system.

Since 2016, the Korea Fair Trade Commission (KFTC) has been looking into Google over allegations it obstructed local smartphone makers, such as Samsung Electronics Co. and LG Electronics Inc., from using operating systems developed by rivals.

Google has hampered market competition by requiring smartphone makers to clinch an "anti-fragmentation agreement (AFA)" when they sign key contracts with Google over app store licenses and early access to OS, according to the regulator.

Under an AFA, device makers are not permitted to install modified versions of Android OS, known as "Android forks" on their products. They are also not allowed to develop their own Android forks.

This practice has helped Google cement its market dominance in the mobile platform market and undermined innovation in the development of new OS for smart devices, according to the regulator.

With its anti-competitive practice, Google's share rose to 97.7 percent of the mobile OS market as of 2019.

Among cases regarding abuse of market dominance and unfair business activities here, it may be the second-largest fine since the KFTC fined U.S. chipmaker Qualcomm Inc. 1.03 trillion won in 2016.

In addition to the fine, the KFTC ordered Google LLC, Google Asia Pacific and Google Korea to take corrective steps.

The regulator has ordered Google to ban its practice of forcing Android device manufacturers to sign an AFA and to make corrections on details about the AFA before reporting them to the commission.

"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 markets," the KFTC said.

The tech giant said it plans to appeal the regulator's decision.

"Android's compatibility program has spurred incredible hardware and software innovation, and brought enormous success to Korean OEMs and developers," Google said in a statement. "This in turn has led to greater choice, quality and a better user experience for Korean consumers."

It said the KFTC's decision "ignores these benefits and will undermine the advantages enjoyed by consumers."

In 2018, European Union antitrust authorities fined Google 4.3 billion euros for an anti-competition practice in the mobile OS and app markets.

The U.S. Justice Department filed a monopoly lawsuit against Google in October 2020 for abuse of its dominant position in digital advertising business.

South Korea's antitrust body is separately investigating three more cases related to Google's alleged anti-competition activity.

The KFTC is looking into whether Google allegedly forced mobile game applications to be only released on its Play store. A probe is underway for Google's unfair business practice over the sale of digital ads.

The commission has been also probing into whether Google's new billing policy has harmed market competition.

Google earlier announced a plan to charge a 30 percent fee to all app developers over in-app digital content purchases in South Korea.

Separately, the National Assembly endorsed an act in August that will curb the dominance Google and Apple exert over payments on their app stores. The move enabled South Korea to become the first nation in the world to enact such a law.

The punitive action against Google came as the KFTC is closely looking into unfair business activity by homegrown online platform giants here -- Naver Corp. and Kakao Corp.

Concerns have mounted that powerful online platform operators have abused their dominant market status and engaged in unfair business practices against contractors, posing a threat to the survival of small merchants.

sooyeon@yna.co.kr

yunhwanchae@yna.co.kr
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