S. Korea hits Google with $177M fine for blocking alternatives
South Korea’s antitrust watchdog will fine Google nearly $177 million for using its dominant market position to prohibit other companies from building out alternatives to its Android operating system.
The order Tuesday from the Korea Fair Trade Commission is the latest in a series of regulatory efforts attempting to rein in tech giant’s influence over consumer technology. It prohibits the company from requiring smartphone makers to sign “anti-fragmentation” agreements when signing contracts with Google over app store licenses. Android is the world’s most-popular mobile operating system, and the agreements are ostensibly meant to reduce software incompatibilities that could cause devices to malfunction.
“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,” according to a translation of agency comments published by the Yonhap News agency.
The Android Compatibility Program is a set of publicly available code designed
to ensure that app developers can make devices that will work together. According to its website, the program encourages devicemakers to “consider licensing” Google’s mobile operating system, which enables access to such services as Google Play, Google Maps, and Gmail. To use that operating system, device manufacturers have to set up a licensing arrangement
with Google.
A Google spokesperson contends the program “has led to greater choice, quality and a better user experience for Korean consumers,” adding that Tuesday’s decision “ignores these benefits, and will undermine the advantages enjoyed by consumers.” The company plans to appeal.
Google has come under increasing scrutiny from
regulators and lawmakers, who say its Android-related policies benefit its own apps and services at the expense of others, allowing it to use its preeminence in one segment of the online ecosystem to dominate another.
In June, the European Union started investigating the company’s influence in online marketing because Google participates “at almost all levels of the supply chain for online display advertising.” The E.U. previously fined it nearly $10 billion for allegedly using illegal tactics to abuse its dominant market position.
In India, a team of antitrust researchers accused the company of abusing its dominant market position in the mobile phone operating system market, leading to a formal investigation by the nation’s competition commission. The case hinged, in large part, on certain legal agreements that Google required manufacturers to sign before they could install widely used apps like Google Maps, Gmail and YouTube, according to a case file dated April 2019.
Google faces pressure in the United States, too. Last year the Justice Department labeled it a “monopolist” and joined with 11 state attorneys general to challenge what they called “exclusionary agreements” that ensured Google was the default search engine on many mobile devices and computers. In early September, Bloomberg reported that the DOJ was readying a second lawsuit over Google’s digital advertising business. In news releases, the DOJ compared its actions against Google to earlier historic antitrust cases involving Microsoft and AT&T.
South Korea’s decision takes issue with a set of legal agreements known as “antifragmentation agreements,” that Google signs with device manufacturers such as Samsung and Amazon.
According to a 2016 paper published by Harvard Business School, the AFA’s not only control what can be installed on Android, but exert some control over the operating systems an entire company is allowed to install on its other devices.