Google Fined $177M For Abusing Its Dominance In The Android Market

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In South Korea, Google was fined 207.4 billion won (roughly $177 million) for abusing its market dominance to prevent device manufacturers from using modified versions of Android.

The Korea Fair Trade Commission (KFTC) is particularly upset with Google’s anti-fragmentation agreements (AFAs), which prevent manufacturers like Samsung from making changes to the operating system.

The ruling forbids Google from requiring manufacturers to sign these AFAs and requires it to modify existing contracts.

The regulator is worried that limiting these forks to the OS has prevented Amazon and Alibaba from launching viable Android competitors. Android is the most widely used mobile operating system in the world, with over 80% of smartphones running on the platform.

Despite the fact that Android’s core is open-source, manufacturers must sign an AFA in order to receive benefits such as early access to the operating system and access to the Google Play Store, which is an essential part of the Android experience for most smartphone users.

“The Korea Fair Trade Commission’s decision is meaningful in a way that it provides an opportunity to restore future competitive pressure in the mobile OS and app market markets,” said KFTC chairperson Joh Sung-wook in a statement. According to the regulator, the fine could be the ninth largest ever imposed.

A Google spokesperson said the company disagreed with the ruling, claiming that Android’s policies had helped Korean phone manufacturers and developers succeed, as well as created opportunities for innovation.

“The KFTC’s decision released today ignores these benefits and will undermine consumer benefits,” a Google spokesperson said, adding that the company intends to appeal the decision. Google has previously stated that AFAs are required to ensure that apps work on a wider range of Android devices.

Android is also used on smartwatches and smart TVs, in addition to smartphones. Per Korea’s regulator, today’s decision also applies to these other categories. Chairperson Joh Sung-wook commented, “Corrective measures included emerging smart device-related areas such as smartwatches and smart TVs.”

The decision comes on the same day that South Korea’s so-called “anti-Google law” takes effect. The new law mandates that major platform providers such as Google and Apple allow developers to integrate third-party payment systems into their apps.

Previously, both companies required developers to use only the built-in payment systems for in-app purchases, which resulted in Apple and Google taking a 30% cut of all transactions. As a result of Epic Games’ legal action, a US judge ruled last week that Apple cannot prevent developers from linking to other payment methods. Epic versus Google is still awaiting a decision.

A new report claims that the Korean regulator is looking into alleged competition restrictions in Google’s Play Store app market, in-app purchases, and ad market, in addition to Google’s anti-fragmentation agreements.

South Korea passed legislation in late August prohibiting global tech companies such as Google and Apple from imposing their own proprietary in-app payment service and commissions on app developers.

This isn’t likely to be Google’s last slap on the wrist in the country.

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