South Korea fines Google for abusing Android dominance

South Korea’s antitrust regulator has fined Google 207.4 billion won (around $177 million) for blocking customised versions of its Android operating system.

The Korea Fair Trade Commission (KFTC) said today that Google’s contract terms with device makers amounted to an abuse of its dominant market position and restricted competition in the mobile OS market, as reported by Reuters.

The KFTC said Google hampered competition by forcing device manufacturers to sign contracts that contained an “anti-fragmentation agreement” (AFA) when it came to app store licences. This meant manufacturers were not able to install modified versions of Android, called “Android forks”, on their devices, which the KFTC said has helped the tech giant to cement its market dominance in the mobile OS market.

In one example, the KFTC highlighted that in 2013 Samsung launched a smartwatch with a customised OS but switched to a different OS as Google regarded the move as an AFA violation.

"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 reported by Reuters.

As a result of the ruling, Google is banned from forcing mobile phone makers to sign AFA contracts, which means manufacturers in South Korea are now able to use modified versions of Android OS on their devices.

A Google spokesperson told IT Pro that it intends to appeal KFTC's decision.

“Android’s compatibility program has spurred incredible hardware and software innovation, and brought enormous success to Korean OEMs and developers," said the spokesperson. "This in turn has led to greater choice, quality and a better user experience for Korean consumers. The KFTC’s decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers."

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

The ruling comes on the same day that South Korea's “anti-Google law” goes into force. Passed in August, the landmark bill bans big app stores from forcing developers to use their platform’s payment systems. The Telecommunications Business Act, as it's formally known, was the first major bill passed by a major economy against Apple and Google.