Google was fined $32 million by South Korea’s antitrust regulator for allegedly preventing developers from releasing games on other platforms in favor of its own Google Play Store.
The Korea Fair Trade Commission (KFTC) determined that Google abused its dominant market position by imposing restrictions on app developers and forcing them to use Google’s billing system for in-app purchases, limiting market competition.
The KFTC also ordered Google to stop forcing developers to use its billing system for in-app purchases and instead allow them to use other payment systems, as well as to be more transparent about its app review process.
This decision is a significant blow to Google’s dominance in the mobile app market and could have far-reaching consequences for the company’s future.
The fine imposed on Google by the Korea Fair Trade Commission (KFTC) is the latest development in a long-running battle between Google and app developers, particularly in South Korea. Google’s dominance in the mobile app market has been a source of concern for many app developers who feel that the company’s policies and practices limit competition and stifle innovation.
In particular, the KFTC found that Google’s restrictions on app developers, which required them to use Google’s billing system for in-app purchases, limited competition, and stifled innovation. This policy prevented developers from using alternative payment systems and charging users lower fees for their services, as Google’s billing system charged a 30% commission on all in-app purchases.
Furthermore, the KFTC found that Google had unfairly limited competition by blocking developers from releasing games on other platforms. This practice forced developers to release their games exclusively on Google’s Play Store, which gave Google an unfair advantage in the market.
The KFTC’s decision to fine Google and order it to stop these practices could have wider implications for the company’s business practices globally. Other countries, including the United States and Europe, are also scrutinizing Google’s business practices and could take similar actions in the future.
In response to the KFTC’s decision, Google has stated that it will comply with the order and make changes to its billing system for in-app purchases. However, the company has also defended its policies and practices, stating that they are necessary to ensure the safety and security of users and to provide a consistent experience across all apps on the Play Store.
Google and One Store
One Store, a local competitor to Google Play, was founded in June 2016 by South Korea’s three telcos — SK Telecom, KT, and LG Uplus — and internet behemoth Naver.
According to KFTC data, Google’s local market share in the mobile Android app market increased to approximately 90% to 95% in 2018, up from approximately 80% to 85% in 2016, while One Store’s market share accounted for approximately 5% to 10% in 2018, down from 15% to 20% in 2016.
The move, according to Korea’s antitrust watchdog, is part of an effort to ensure fair competition in the app market by preventing the US tech giant from abusing its dominant position.
According to the KTFC press release, Google Play and One Store generate more than 90% of domestic sales from game sales. According to the KFTC, Google’s activity impacted gaming companies ranging from large video game makers such as NCSoft, Netmarble, and Nexon to small and mid-sized game developers.
“We have cooperated diligently with the KFTC’s investigation and deliberation process for the past five years and believe that there has been no violation of the law,” a spokesperson at Google said in an emailed statement. “Google makes substantial investments in the success of developers, and we respectfully disagree with the KFTC’s conclusions. We will carefully review the final written decision once it’s shared with us to evaluate the next course of action.”
Overall, the KFTC’s decision to fine Google and order it to stop these practices is a significant development in the ongoing battle between Google and app developers, and it could have wider implications for the mobile app market and competition in the technology industry.