In many parts of the world, Google and Apple are frequently accused of abusing their market-dominant positions to stifle competition and innovation. Recently in South Korea, the country’s competition regulator fined Google 207.4 billion Korean won, or $176.9 million. The fine was levied against Google for abusing its dominant market position in smartphone operating systems to limit competition.
Many Android smartphones compete directly with Apple’s iPhone and other iOS devices, Android is by far and large the dominant operating system in the mobile market. The Korea Fair Trade Commission found that Google used its dominant market position to prevent smartphone builders like Samsung from using operating systems developed by rival companies.
According to the Korea Fair Trade Commission, Google forces smartphone makers like Samsung to sign a document called the “anti-fragmentation agreement” before receiving Google Play licenses and early access to new versions of the Android operating system. The agreement prevented smartphone manufacturers from using modified versions of Android on their devices.
According to the regulation agency, that requirement stifles innovation, preventing the development of new operating systems for smartphones. The agency has asked Google to stop forcing companies it works with to sign anti-fragmentation agreements and has ordered the search giant to take corrective steps. Google alleges that its practices improve hardware and software innovation and have helped smartphone makers in Korea succeed on the international market.
Google claims the decision ignores the benefits its processes bring to smartphone manufacturers and alleges the decision will undermine consumer advantages. Google has confirmed it will appeal the decision. A fine of nearly $177 million is a lot of money but is a drop in the bucket compared to the massive profits Google rakes in. The search giant posted revenue last quarter of over $61 billion. Its decision to appeal is more about losing control over smartphone operating systems than the money lost to the fine.