Google has been fined 207.4 billion won (around $177 million) in South Korea for abusing its dominant market position to stop device manufacturers from using modified versions of Android, Bloomberg reports. Specifically, the Korea Fair Trade Commission (KFTC) is taking issue with the anti-fragmentation agreements (AFA) Google has manufacturers like Samsung sign, which prevents it from making changes to the operating system.
The ruling prohibits Google from forcing manufacturers to sign these AFAs, and will also require it to modify existing agreements.
The regulator is concerned that restricting these forks to the OS has prevented the emergence of viable competitors to Android from the likes of Amazon and Alibaba. Android is currently the world’s most popular mobile operating system and is installed on over 80 per cent of smartphones globally. Although the core of Android is open-source, manufacturers have to sign an AFA to get benefits like early access to the operating system as well as access to the Google Play Store, an essential part of the Android experience for most smartphone users, CNBC notes.
“The Korea Fair Trade Commission’s decision is meaningful in a way that it provides an opportunity to restore future competitive pressure in the mobile OS and app market markets,” said KFTC chairperson Joh Sung-wook in a statement reported by Reuters. The fine could be the ninth-largest the regulator has ever issued, it said.
In a statement, a spokesperson from Google told CNBC that the company disagreed with the ruling, and argued that Android’s policies had allowed Korean phone manufacturers and developers to be successful, and had created opportunities for innovation. “The KFTC’s decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers,” the spokesperson said, adding that Google plans to appeal the ruling. Google has previously said that its AFAs are necessary to ensure that apps work across more Android phones.
In addition to smartphones, Android is used on devices like smartwatches and smart TVs. Korea’s regulator said that today’s ruling also applies to these other categories. “Corrective measures included emerging smart device-related areas such as smartwatches and smart TVs,” Chairperson Joh Sung-wook said in comments reported by Bloomberg.
The ruling comes on the same day as the so-called “anti-Google law” goes into force in South Korea. The new law requires major platform owners like Google and Apple to allow developers to use third-party payment systems in their apps. Both companies had previously required developers to use only the built-in payment processes for in-app purchases, which in most cases results in Apple and Google collecting a 30 per cent cut of transactions. Similarly, a US judge ruled last week that Apple can’t stop developers from linking to other payment methods as a result of legal action brought by Epic Games. The decision on Epic v. Google is still pending.
As well as Google’s anti-fragmentation agreements, Bloomberg notes that the Korean regulator is also investigating alleged competition restrictions in Google’s Play Store app market, in-app purchases, and the ad market.