Google big setback: South Korea imposes fine for restricting competition in mobile OS market

In a big setback to Google, South Korea has fined the tech giant approximately Rs 1338 crore (USD 176.64 million) for blocking customised versions of its Android operating system (OS). This is Google's second setback in the country in less than a month.

The Korea Fair Trade Commission (KFTC) said on Tuesday Google's contract terms with device makers amounted to an abuse of its dominant market position that restricted competition in the mobile OS market. "The Korea Fair Trade Commission's decision is meaningful in a way that it provides an opportunity to restore future competitive pressure in the mobile OS and app market markets," KFTC Chairperson Joh Sung-wook said in a statement.

KFTC's allegations pointed out that the US-based firm obstructed local smartphone makers, such as Samsung Electronics Co and LG, from using operating systems developed by rivals.

Meanwhile, Google said in a statement it intends to appeal the ruling, saying it ignores the benefits offered by Android's compatibility with other programs and undermines advantages enjoyed by consumers.

What are the allegations?

KFTC noted that Google has manipulated competition by requiring smartphone makers to clinch an anti-fragmentation agreement (AFA).

Smartphone makers have to sign an AFA contract with Google over app store licenses and early access to OS, according to the regulator.

The AFA discourages smartphone makers to install modified versions of Android Operating Systems known as 'Android forks'.

The regulator also noted that smartphone makers were also not allowed to develop their own Android forks.

That has helped Google cement its market dominance in the mobile OS market, the Korea Fair Trade Commission said.

What is anti-Google law?

The bill was passed in late August by South Korea's parliament to curb Google, Apple commission dominance.

It bans major app store operators such as Google and Apple from forcing software developers to use their payment systems.

This effectively stops app store operators such as Google and Apple from charging commissions on in-app purchases.

Google is banned from forcing device makers to sign AFA contracts, allowing manufacturers to adopt modified versions of Android OS on their devices.

(With Reuters Inputs)