SKorea to fine Google $177M for forcing software on devices

In what would be one of the country’s largest antitrust punishments ever, South Korea’s competition watchdog aims to fine Google at least 207.4 billion won ($177 million) for allegedly preventing smartphone makers like Samsung from adopting other operating systems.

South Korea began enforcing a revamped telecommunications law on Tuesday, prohibiting app market providers such as Google and Apple from pressuring smartphone users to pay with their in-app purchasing systems. It is the first country to enact such rules.

South Korea has traditionally kept a careful eye on how foreign technology companies operate in the country. In recent years, policymakers have focused their attention on Google and Apple, vowing to prevent them from exploiting their dominating market positions in mobile internet.

Google has impeded competition since 2011, according to Joh Sung-wook, chairperson of South Korea’s Fair Trade Commission, by requiring its electronics partners to sign “anti-fragmentation” agreements. Companies have been unable to install modified versions of Google’s operating systems on devices such as smartphones and smartwatches as a result of this. According to her, this provided Google with an easy method to solidify its dominance in the mobile software and app sectors.

Manufacturers like Samsung and LG have to agree to the requirements when signing contracts with Google for app store licencing or early access to computer codes so that they could create devices ahead of Google’s release of updated Android and other operating systems, according to Joh.

In 2013, Google compelled Samsung, the developer of the worldwide popular Galaxy Android phones, to abandon its intentions to install a customised version of Google software on its Galaxy Gear smartwatches.

Samsung turned to Tizen, a little-known operating system, but eventually abandoned it due to a lack of applications. Google’s Wear OS now powers the company’s latest smartwatches. LG’s plans to release smart speakers based on customised Google software were also foiled.

The fine announced for Google would be the FTC’s seventh largest in history. It’s possible that the corporation will have to pay considerably more.

Another FTC official, Kim Min-jeong, said the amount announced by her commission was based on Google’s earnings in South Korea from 2011 to April this year. She predicted that the final fine, which may be issued as early as October or November, will be slightly higher.

Google’s South Korean office, which could sue to overturn the fine, did not immediately reply to demands for comment.

“We will ban (Google) from requiring device manufacturers to sign anti-fragmentation agreements in relation to (business contracts) regarding Play Store licensing and early access to operating systems,” Joh said in a news conference.

“Our corrective measures … will allow domestic device manufacturers to release ‘fork’ devices in the domestic and foreign markets and foreign manufacturers to release ‘fork’ devices in the domestic market,” she said, referring to devices powered by customized operating systems.

The FTC began investigating the case in 2016 and is currently investigating Google’s activity in mobile applications and advertising markets, among other things.

The Korea Communications Commission, the country’s telecoms regulator, announced earlier Tuesday that a revised telecommunications law had taken effect, barring Google and Apple from mandating developers to use their in-app purchasing systems.

The digital behemoths have been chastised around the world for compelling developers to utilise in-app purchasing mechanisms in exchange for up to 30% commissions. The businesses claim that the commissions assist pay for the upkeep of the app stores.

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