Google fined W42b for abusing market dominance

An illuminated Google logo is seen inside an office building in Zurich, Switzerland (Reuters-Yonhap)

South Korea’s antitrust regulator said Tuesday it is imposing a fine of 42.1 billion won ($32 million) on Google LLC, Google Korea and Google Asia Pacific, along with a corrective order, for abusing their market dominance to solidify the No. 1 position in the local mobile gaming app market.

The move came as the US platform giant pressured South Korean mobile game publishers to launch their new games through Google Play exclusively, prohibiting them from releasing their content on the One Store, between June 2016 and April 2018, the Fair Trade Commission said.

The One Store is a local app market launched in June 2016 with the combined app stores of Korea's top three telecom carriers -- SK Telecom, KT Corp. and LG Uplus -- and Naver's app store. It is only downloadable on mobile devices with an Android operating system.

Under shady agreements between Google and game companies, the US firm made content appear on the market as “featured games,” while providing marketing benefits to the game publishers in return. Google deemed it was within its “power to manage partners,” the FTC said.

In an email between Google executives released by the antitrust regulator, it was stated, “As the developers on One Store bring new titles out we should push for exclusive on Play and look to get their back catalogue off One Store as a result of us doing marketing support on their new release.”

A Google Korea’s employee note stated, “We must make (One Store) into a minor loser league.” Google also internally required its employees to delete related emails and to discuss issues offline to prevent possible evidence of violating fair trade rules, the FTC said.

Google’s unfair business practices helped increase its market shares in the local app market. The platform giant released megahit games such as NCSoft's Lineage M, Nexon’s MapleStory M and Webzen’s Mu Origin 2 exclusively via Google Play through this strategy.

According to data compiled by the FTC, Google’s market share, in terms of amount spent, increased to 90-95 percent in 2018 from 80-85 percent in 2016. On the other hand, One Store’s market share dropped to 5 to 10 percent from 15 to 20 percent over the cited period, the FTC said.

"By blocking the release of games on One Store, Google has hindered innovation and consumer benefits in the app market and mobile gaming sector," Yu Seong-wook, the FTC’s anti-monopoly bureau director, said during a press briefing earlier in the day.

The FTC believes this is the first case in the world where Google was found to have engaged in anti-competitive behavior in the app market. "Since there is no app market in other countries that can compete effectively with Google, it seems that they felt threatened here," he said.

Meanwhile, this marks the antitrust regulator's second punishment leveled against Google. In September 2021, Google was slapped with 225 billion won in fines for using the success of its mobile operating system to limit competition.

Google prohibited smartphone manufacturers, especially Samsung Electronics, from developing or installing operating systems using Google’s Android algorithm, according to the FTC. But the case is pending at the Seoul High Court, as Google filed to cancel the disciplinary action.

By Jie Ye-eun(yeeun@heraldcorp.com)