FTC opens penalty review against Google for bundling subscriptions

The antitrust regulator is moving to penalize Google Korea for limiting consumer choices by bundling YouTube Premium and YouTube Music.

The Google and YouTube logos are seen at the entrance to the Google offices in Los Angeles, California, November 21, 2019. [AFP/YONHAP]

Korea’s antitrust regulator officially opened a procedure to determine the penalties against Google for a possible violation of the Fair Trade Act by bundling its YouTube Premium subscription with YouTube Music, a practice only conducted in the country.

The Fair Trade Commission (FTC) said on Monday that it sent a review report to Google Korea last week for unfairly leveraging its market dominance on the music streaming market.

"While we cannot comment on the details of an ongoing investigation, we will continue to fully cooperate with the commission," a Google Korea spokesperson said on Monday.

In Korea, the ad-free YouTube Premium tier is bundled with its streaming platform YouTube Music for a monthly fee of 14,900 won ($10.78). Domestic users may subscribe only to YouTube Music for 11,990 won, but there is no Premium-only option.

The FTC contends that by limiting the choice of subscriptions, Premium users were forced to automatically purchase YouTube Music, unfairly hindering the business activities of other music streaming providers.

The Fair Trade Act prohibits a dominant company from impeding the business activities of other entities.

About 88 percent of Korea’s total population uses YouTube, equivalent to 45.79 million people, according to May data by market tracker Mobile Index.

YouTube Music is also Korea’s No. 1 music streaming platform, with 7.2 million monthly active users (MAU) in April, followed by Melon at 6.97 million, Genie Music at 3.09 million and Spotify trailing far behind at 690,000 users.

YouTube Music’s MAU surged 113.65 percent compared to April 2021, while over the same period, domestic platforms lost users, with Melon’s MAU sinking 17.6 percent and Genie Music losing 37 percent.

The FTC launched an on-site investigation in February 2023 regarding the matter at Google Korea’s office building in Gangnam District, southern Seoul.

The chair of the regulator, Han Ki-jeong, stated at a press conference last month that the agency “will complete the investigation soon and take strict measures if any violations of the law are confirmed.”

The FTC will gather Google Korea’s responses to the review report and then hold a plenary session to determine the level of the sanctions.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]