South Korea Fines Google £26m For Blocking Rival App Store

South Korea’s trade regulator on Tuesday fined Google 42.1 billion won ($31.88m, £26m) for working with local video game makers to attempt to block the growth of a rival app store.

Google tried to block the expansion of rival app store One Store by asking several local video game makers to exclusively release their games on Google’s Play Store in exchange for Google promoting their games and giving them additional support abroad, Korea’s Fair Trade Commission (KFTC) said.

The US search giant worked with game makers including NCSoft, Netmarble, smaller firms and Chinese companies, the KFTC said.

Google featuring a game prominently in the Play Store was considered critical to its success, the regulator said.

‘No violation’

The US company denied offering benefits to developers in exchange for exclusive releases, saying there “has been no violation of the law”.

The company said Google Play is an open platform that gives developers control over how they distribute their apps and that Google makes “substantial investments in the success of developers”.

“We respectfully disagree with the KFTC’s conclusions,” the company said.

Google began the conditional offers in June 2016, when One Store began operating in Korea, and continued through April 2018, the regulator said.

Anti-competitive

This hindered One Store’s growth and added 1.8tn won to Google’s revenues, the KFTC said.

Yu Seong Wook, director general for the KFTC’s Anti-Monopoly Bureau, told a press conference Google was not carrying out “normal marketing activities” but that its “intention was to exclude One Store from the market, which it saw as a strong competitor”.

The KFTC cited internal memos, documents and emails from Google alleging that it developed a strategy to shut out One Store with the awareness that its actions were anti-competitive.

Play Store and One Store both generate more than 90 percent of their sales in Korea from selling games, the KFTC said.

App store competition

Google held about 80 to 95 percent market share in themobile Android app market in Korea from 2014 to 2019, the KFTC said, and currently holds about three-quarters of the market, with the rest held by One Store and Apple, according to industry analysts.

One Store, founded by leading telecom firms SK Telecom, KT and LG Uplus, along with internet firm Naver, is currently preparing an initial public offering with a valuation of up to $833m.

The KFTC fined Google more than 200bn won in 2021 for blocking customised versions of the Android mobile operating system.