South Korea’s Antitrust Regulator Fines Google $177 Million For Blocking Android Customization

The Korea Fair Trade Commission has fined Alphabet Inc’s Google 207 billion won ($177 million) for blocking customized versions of its Android operating system (OS).

South Korea’s competition regulator alleged the American tech giant of using its dominant market position in the mobile operating industry to hold back competition, by blocking smartphone makers, like Samsung, from using operating systems developed by rivals.

The Korea Fair Trade Commission (KFTC), on Tuesday, said that Google’s contract terms with device makers amounted to an abuse of its dominant market position that restricted competition in the mobile operating system (OS) market.

The Chairperson of the Korea Fair Trade Commission, Job Sung-Wook, in a statement, said that the decision to sanction Google was meaningful, as “it provides an opportunity to restore future competitive pressure in the mobile operating system and app markets.”

Explaining further, the Korea Fair Trade Commission said that Google repressed competition by making device producers abide by an “anti-fragmentation agreement (AFA)” when signing key contracts with it regarding app store licenses. Under the anti-fragmentation agreement, phone makers were prevented from adopting modified versions of the Android operating system (known as ‘Android forks’) on their devices. And this, according to the Korea Fair Trade Commission, has helped Google solidify its market dominance in the mobile operating system (OS) market.

The KFTC said it had asked the tech giant to stop forcing companies to sign anti-fragmentation agreements and ordered it to take corrective steps. Under the latest ruling, Google is banned from forcing device makers to sign anti-fragmentation agreement contracts, thus allowing manufacturers to adopt modified versions of Android OS on their devices.

The fine comes on the day that an amendment to South Korea’s Telecommunications Business Act – popularly dubbed the “anti-Google law”, came into effect. The bill was passed in late August and it allows app developers to avoid paying hefty commissions to major app store operators, including Google, by directing users to pay via alternate platforms.

Responding to the action taken by the South Korean regulator, Google, in a statement, said that it intends to appeal the ruling.

Currently, Google’s Android operating system holds the biggest share of the smartphone market, ahead of Apple’s iOS platform. Compared to Google’s last quarter revenue figures which stood at $61.88 billion, the $177 million fine might seem inconsequential. Nevertheless, the imposed fine by the Korea Fair Trade Commission is the latest setback for the tech company in South Korea.