South Korea Slaps Google With $177m Fine

Google has been slapped with a hefty financial penalty in South Korea over its domination of the mobile operating system segment.

The fine of 207 billion won ($176.64 million) was imposed by South Korea’s antitrust regulator, the Korea Fair Trade Commission (KFTC), Reuters reported.

The regulator was unhappy that Google has blocked customised versions of its Android operating system (OS).

Android fine

The KFTC reportedly made the announcement on Tuesday, that Google’s contract terms with device makers amounted to an abuse of its dominant market position that restricted competition in the mobile OS market.

Google however has reportedly said it intends to appeal the ruling, saying the fine ignores the benefits offered by Android’s compatibility with other programs and undermines advantages enjoyed by consumers.

“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,” KFTC Chairperson Joh Sung-wook was quoted by Reuters as saying in a statement.

The antitrust regulator said this could be the ninth-largest fine it has ever imposed.

KFTC said Google hampered competition by making device producers abide by an “anti-fragmentation agreement (AFA)” when signing key contracts with it regarding app store licences.

Under the AFA, manufacturers could not equip their handsets with modified versions of Android, known as ‘Android forks’. That has helped Google cement its market dominance in the mobile OS market, the KFTC said.

Under the ruling, Google is apparently banned from forcing device makers to sign AFA contracts, allowing manufacturers to adopt modified versions of Android OS on their devices.

But an example was cited where Samsung Electronics in 2013 launched a smartwatch with a customised OS.

However it switched to a different operating system after Google reportedly regarded the move as an AFA violation, KFTC said.

Samsung Electronics reportedly declined to comment on the matter.

Korea setbacks

This is the second setback for Google in South Korea.

Late last month South Korea became the first major world economy to effectively stop Apple and Google from charging commissions on in-app purchases.

This was because South Korea’s parliament approved the amended ‘Telecommunications Business Act’ (also known as the anti-Google law).

This stops Google and Apple from forcibly charging software developers up to a 30 percent commissions on in-app purchases

The legislation went into effect today, on Wednesday 15 September.