South Korea regulator slaps Google with $176.9 million fine

Korea Fair Trade Commission, the South Korean competition regulator, has fined Google $176.9 million for allegedly using its market position to stifle competition. The regulator said the US tech giant used its market position to block smartphone makers like Samsung from using operating systems developed by rivals.

It alleged that Google required smartphone makers to agree to an ‘anti-fragmentation agreement (AFA)’ when signing key contracts with the company over app store licenses and early access to the operating system. Under the AFA, device makers are not permitted to install modified versions of Android OS, known as ‘Android forks’ on their products, and they are also not allowed to develop their own Android forks.

The Korea Fair Trade, as per Yonhap News, said this practice has helped Google cement its market dominance in the mobile platform market and undermined innovation in the development of the new OS for smart devices. As such, the regulator also ordered Google LLC, Google Asia Pacific and Google Korea to take corrective steps.

Moreover, it ordered the US tech giant to ban its practice of forcing Android 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 devices markets,” the Korea Fair Trade Commission said.

The Commission is also investigating whether Google allegedly forced mobile game applications to be only released on its Play store, and is probing whether the company’s new billing policy has harmed market competition.

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However, a Google spokesperson argued that Android’s compatibility program has spurred hardware and software innovation, and brought success to Korean phone makers and developers. “The KFTC’s decision ignores these benefits and will undermine the advantages enjoyed by consumers. Google intends to appeal the KFTC’s decision,” the company said in a statement.