A South Korean antitrust regulator has fined Alphabet Incorporated’s Google $176.64 million for blocking customized versions of its Android operating system (OS), but Google is gearing up to challenge the fine.
This is the second setback for the US tech giant in less than a month, following a US$593 million fine in France recently for using news content without proper negotiation with publishers and news companies.
The Korea Fair Trade Commission (KFTC) ruled that terms Google has with device makers amounted to the abuse of Google’s dominant market position that restricted competition in the mobile OS market.
Google’s mobile operating system powers more than 80 percent of smartphones around the world.
But Google said in a statement it intends to appeal. It said the ruling ignores the benefits offered by Android’s compatibility with other programs and undermines advantages enjoyed by consumers.
The fine, one of the highest levied in South Korea over abuse of market dominance, came on the same day an amendment to South Korea’s Telecommunications Business Act – popularly dubbed the “anti-Google law” – came into effect.
KFTC said Google hampered competition by making device producers abide by an “anti-fragmentation agreement (AFA)” when signing key contracts with it regarding app store licenses.
Under the AFA, manufacturers could not equip their handsets with modified versions of Android, known as “Android forks”. That has helped Google cement its market dominance in the mobile OS market, the KFTC said.
The watchdog banned Google from forcing manufacturers to sign AFA contracts and ordered that it modify existing ones.
The regulator said the fine could be the ninth-biggest it has ever imposed.
In 2013, Samsung Electronics Co Ltd launched a smartwatch with a customized OS, but switched to a different OS after Google regarded the move as an AFA violation, KFTC said.
Samsung Electronics declined to comment.
Korean regulators have stepped up scrutiny of tech giants this year, including local players. Kakao Corp’s group of companies lost more than $16 billion of market value at one point this month after prominent lawmakers called the nation’s biggest messaging and social media service “a symbol of greed”.
