South Korea Fines Google $32 Million for Squeezing Out Local Rival

Google Play was a dominant gatekeeper that exercised significant power over app developers, the regulator said. Being featured on the main screen of the Google Play app store was considered critical to the success and global expansion of South Korean mobile game apps, making them vulnerable to Google’s moves.

The South Korean FTC said Google made conditional offers to game app makers that effectively pushed out One Store, which was launched in June 2016. In the following two years, Google’s share of South Korea’s mobile app market rose from 80% to 90%, predominantly at One Store’s expense. The lack of new big game offerings meant One Store’s sales saw negative growth in 2017 and 2018, the FTC said.

Google’s practices continued until April 2018, when the South Korean FTC began an investigation, according to the regulator.

Google believes that “there has been no violation of the law,” a company spokeswoman said. “Google makes substantial investments in the success of developers, and we respectfully disagree with the KFTC’s conclusions,” she said.

The U.S. tech giant plans to carefully review the South Korean FTC’s final written decision once it is shared to evaluate its next course of action, according to the spokeswoman.

The South Korean ruling is the latest in a string of regulatory actions around the world that scrutinize the dominance of Google and

Apple Inc.

over the mobile app ecosystem and their potential breach of antitrust regulations.

In the U.S., the Justice Department is ramping up its investigation into whether Apple has monopoly power, including the company’s policies governing mobile third-party software on its devices and whether Apple’s mobile operating system, iOS, operates in an anticompetitive way.  

Across Europe, Apple is preparing to let applications be downloaded onto iPhones and iPads outside its App Store in response to a new European Union law aimed at creating more competition for the tech sector. Germany’s competition regulator said earlier this year that Google should provide its users with more control over the extent to which their data is combined from various services.  

One Store is a local mobile app marketplace created by South Korea’s three telecommunication firms—SK Telecom Co.,

KT Corp.

and

LG Uplus Corp.

—and internet company

Naver Corp.

As part of its ruling, the South Korean antitrust regulator disclosed internal communication records of Google employees that purported to show the U.S. company perceived One Store as a threat to its business in South Korea. Several memos, documents and emails revealed that Google pushed on with a strategy to thwart One Store, despite being aware that its practices could breach local antitrust laws.

The app makers affected by Google’s move included large South Korean game companies including

Netmarble Corp.

,

NCsoft Corp.

and

Nexon Co.

, as well as smaller mobile app developers from South Korea and China, according to the South Korean FTC. Big game titles such as Netmarble’s Lineage 2, NCsoft’s Lineage M and Nexon’s MaplestoryM make up most of Google Play’s earnings, the regulator said.

In addition to the fine, the South Korean FTC ordered Google LLC, Google Korea and Google Asia Pacific to correct its practices and to create an internal monitoring system to ensure that similar practices don’t recur and to report the results to the regulator.

Google has faced prior legal scrutiny over its practices in South Korea. Google has filed a lawsuit seeking to nullify the South Korean FTC’s 2021 fine of around $177 million for obstructing other companies from developing rival versions of the Android operating system. The same year, South Korea enacted the world’s first law mandating Google and Apple to open up their app stores to alternative payment systems.

Last year, South Korea’s Personal Information Protection Commission fined Google and

Facebook

parent Meta a total of more than $70 million over alleged digital-privacy violations including collecting and using personal information without users’ consent. Last month, the two U.S. companies appealed the ruling. 

Write to Jiyoung Sohn at [email protected]