[Editorial] Fair trade authority's penalty must mark start of addressing abuses by Big Tech

The penalty Korea's free trade authority levied on Google is a good start, but there's more that must be done to rectify abuses of market dominance by Big Tech companies

Joh Sung-wook, chairperson of the Korea Fair Trade Commission, holds a briefing regarding sanctions on Google and its abuse of its market-dominant position at the government complex in Sejong.

The Korea Free Trade Commission (KFTC) fined Google 207.4 billion won (US$177 million) on Tuesday for essentially compelling manufacturers to use its Android operating system on their devices and ordered Google to rectify its behavior. This measure, which is designed to correct Google’s high-handed use of OS implementation contracts to block the emergence of innovative smart devices and services, is the toughest penalty that Google has faced to date in South Korea.

The KFTC said that the anti-fragmentation agreement (AFA) signed by device manufacturers represented an abuse of Google’s market-dominant position. Manufacturers who signed this contract with Google were obligated to use the Android operating system on all the devices they released to the market. They were not allowed to equip their devices with operating systems they’d developed on their own or with Android “forks,” referring to modified versions of the Android source code.

Manufacturers had no choice but to accept the AFA, which was a requirement for receiving licenses for the Google Play Store. That led to the dominance of the Google OS. Samsung Electronics had planned to use an OS of its own development in its Galaxy Gear smartwatch but backed down after receiving threats from Google. Samsung also abandoned an attempt to use a forked OS.

The KFTC said that Google had “thoroughly controlled development of competing products from the development phase,” which it described as a “restriction on competition for which there is little precedent.”

The KFTC ordered Google to inform manufacturers and affiliates that are based in Korea and businesses and affiliates that manufacture, distribute, or sell devices available in Korea of its ruling — namely, that Google isn’t allowed to force them to accept an AFA. Google must also revise contracts in line with the ruling.

If properly implemented, the ruling will enable manufacturers to develop devices that don’t use the Android OS.

Google responded to the KFTC’s ruling by promising to appeal in the courts as soon as it receives the text of the decision. But since the KFTC carried out three detailed reviews of this matter and went to a great effort to guarantee Google’s right to defend itself and access evidence, we expect the decision won’t be overturned in court.

In July 2018, the European Commission fined Google and ordered it to take corrective actions after it used the AFA to prevent the manufacture and sale of smartphones and tablet PCs using OS based on Android forks.

Both Korea and elsewhere are seeing serious abuses by market-dominant tech companies in various fields. The government and the National Assembly need to speed up their response to this issue.

A law that will prevent Google and Apple — which operate the world’s two dominant app marketplaces — from forcing app developers to adopt their in-app payment systems and accompanying fees went into effect on Tuesday. The law, which is nicknamed the “Google power-abuse prevention act,” is the first of its kind in the world. That’s something to be proud of.

In addition, the KFTC is investigating three cases in which Google prevented game makers from releasing their services on competing app marketplaces. We hope the KFTC will take action on those cases as well.

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