S. Korea fines Google $238m for abusing smartphone dominance

SEOUL • South Korea has fined Alphabet's unit Google US$177 million (S$237.8 million) for hampering the development of rivals to its Android operating system, sustaining a campaign targeting the US search giant's dominance in smartphone software.

Regulators accuse Google, whose mobile operating system powers more than 80 per cent of smartphones worldwide, of using its immense bargaining power to squeeze out the competition.

The Korea Fair Trade Commission (KFTC) said Google's anti-fragmentation agreements (AFAs) with manufacturers like Samsung Electronics and LG Electronics prevented gadget makers from developing or using modified versions of the Android OS.

The watchdog banned Google from forcing manufacturers to sign AFA contracts and ordered that it modify existing ones.

South Korea in August became the first country to pass a law forcing Apple and Google to open up their app stores to outside payment systems, setting a potentially radical precedent for their lucrative operations everywhere from India to the United States. That Bill became effective yesterday, the Korea Communications Commission said in a statement.

The fine is one of the highest levied in the country over abuse of market dominance, with only Qualcomm's mobile chipsets drawing higher sanctions.

Google responded by saying Android has accelerated innovation - including among Korean firms - and improved the user experience, and that it will appeal the decision.

"The KFTC's decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers," the company said in a statement.

"It shows the KFTC is taking action after years of sitting on the fence," said research director Tom Kang at Counterpoint. "It has made the verdict that Google enjoys monopoly power so the regulator will continue to monitor and fine the company and other internet giants like it. It's a big win for increased competition."

The new measures from the KFTC are intended to spur competition by freeing companies to create so-called forks of Android - versions built from the same basic building blocks but modified to suit the manufacturer's aims, such as targeting different device classes or use cases - without fear of punitive measures from Google.

"The Fair Trade Commission's action was not limited to mobile devices, but corrective measures included emerging smart device-related areas such as smart watches and smart TVs," KFTC's chairman Joh Sung-wook said in a briefing yesterday. "Therefore, we expect that new innovations will occur as some competitive pressures in this area are activated."

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A version of this article appeared in the print edition of The Straits Times on September 15, 2021, with the headline 'S. Korea fines Google $238m for abusing smartphone dominance'. Subscribe