Google slapped with $32 mn fine for unfair practices in app market

Seoul, April 11

South Korea's antitrust regulator on Tuesday slapped a fine of 42.1 billion won (more than $31.8 million) on Google and its regional arms for unfair business practices aimed at solidifying its dominance in the Korean mobile gaming app market.

The punishment came as the U.S.-based global tech giant made shady agreements with South Korean mobile game companies between June 2016 and April 2018, banning them from releasing their content on One Store, according to the Fair Trade Commission (FTC).

One Store is a major homegrown app market launched in January 2016 by South Korea's three mobile carriers, along with Naver Corp, reports Yonhap news agency.

"Google analysed that the launch of a competitive and comprehensive app market, One Store, will have a major impact on its sales in South Korea," the FTC said.

Under the agreement, the US behemoth asked game companies to release their content exclusively on its platform Google Play, in return for having the content appear on the market as "featured," along with providing other marketing benefits.

Being aware of a potential violation of fair trade rules, Google also internally required its employees to delete related emails, and discuss issues offline to avoid leaving traces of such agreements, the FTC said.

The regulator said that the agreement helped Google solidify its dominance in the local app market.

According to the data compiled by the FTC, Google, which accounted for around 80 to 85 percent of the local app market in terms of amount spent in 2016, was able to expand its presence to 90 to 95 per cent in 2018.

On the other hand, One Store fell from 15-20 percent to only 5-10 per cent over the period, the FTC added.

"The availability of the same game in multiple app stores promotes competition, including diversifying content and consumer benefits," the regulator said.

"By blocking the release of games on One Store, Google has hindered innovation and consumer benefits in the app market and mobile gaming sector."

The fine, along with a corrective order, will be imposed on Google, Google Korea and Google Asia Pacific.

Google said it does not agree with the Korean FTC's decision, claiming it has not violated any local competition laws.

"We compete vigorously with other app markets and are proud of the benefits we deliver to developers, including the gaming industry and everyday users, through Google Play," the U.S. tech giant said in a statement. "Unlike some mobile operating systems, Android gives developers complete control over how they distribute their apps."

"Google makes substantial investments in the success of developers, and we respectfully disagree with the KFTC's conclusions," it said.

It said it will determine its future course of action against the FTC after carefully reviewing the written decision.