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South Korea’s latest decision on Google frees rival companies to modify Android OS

The country’s antitrust watchdog fined Google for hindering the development of Android OS forks through specific contracts.

South Korea on September 14 fined Google 207.4 billion won ($177 million) for using its dominance to hinder the development of rivals to its Android operating system. The Competition Commission of India is probing Google for the same reason as well, and the South Korean decision possibly foreshadows what India’s antitrust watchdog might decide.

What is the fine for?

The Korean Fair Trade Commission (KFTC) said that Google’s anti-fragmentation agreement (AFA) with smartphone manufacturers like Samsung and LG is an abuse of dominance because it prevents these companies from developing their own modified version of Android (known as Android forks), thereby hindering the entry of competing operating systems into the market and preventing innovation.

Although Android is open-source, manufacturers have to sign an AFA to get a lot of the benefits that Google offers including access to the Google Play Store. The Commission has now banned Google from forcing manufacturers to sign such AFA contracts and ordered it to modify existing ones.

In a statement to Bloomberg, Google said that Android has accelerated innovation and improved the user experience and that the company will appeal the decision.”The KFTC’s decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers,” the company said.

KFTC expects to spur competition by freeing companies

The Korean antitrust watchdog expects to spur competition by freeing companies to create Android forks, which are versions of the Android built from the open-source code provided by Google but modified to suit the manufacturer’s needs.

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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 markets. – KFTC Chairperson Joh Sung-wook.

Notably, the KFTC said that its decision was not just limited to smartphones, but includes devices like smartwatches and smart TVs as well.

India is investigating Google over similar issues as well

The Competition Commission of India (CCI) has launched multiple investigations into Google, which cover some of the same issues that led to the fine in South Korea.

Investigation into Android OS: According to an order issued by the CCI in April 2019, Google appeared to have misused its dominant position in India by making it harder for phone makers to choose alternative versions of Android (Read the complete order here). The CCI’s order found that Google’s restrictions on manufacturers seemed to amount to the imposition of “unfair conditions” under India’s competition law and called for a wider probe against Google.

Investigation into Play Store and Google Pay: In November 2020, CCI ordered a detailed investigation into Google’s payment policies and alleged manipulation within Play Store. The Commission said that there was prima facie evidence that Google may be abusing its dominant position in India, with regards to Play Store’s exclusivity and Google Pay  services. The CCI ordered an investigation into these aspects of Google’s practices:

  • High commissions
  • Exclusivity regarding the choice of payment systems for app purchases
  • Preference to Google Pay for payments

Investigation into Android TV OS: In June 2021, CCI ordered an investigation into Google over its Android TV operating system (OS) used in smart TVs after receiving a complaint that Google is abusing its dominant position and entering into anti-competitive agreements with smart TV manufacturers like Xiaomi and TCL. The complaint argues that Google’s agreements prevent manufacturers from developing forked Android versions and deny market access, inducing access to Play Store, for those who develop forked versions.

ADIF asks government to expedite probe against Google: The Alliance of Digital India Foundation (ADIF), a 350-member group of Indian start-ups, welcomed the KFTC decision and asked the Indian government to expedite it probe against Google in India. “Given Google’s presence and dominance in multiple key markets is tied to the health of the digital and internet economy it becomes pertinent for the Indian Government, and its key regulatory institutions involved to take note and enact legislative actions for the benefit of our ecosystem and our startups,” said Sijo Kuruvilla George, executive director at Alliance of Digital India Foundation, according to Economic Times.

$5 billion fine in EU

In July 2018, the European Commission imposed a $5 billion fine on Google for violating anti-trust laws, saying the company abused its position in three major ways: by compulsorily bundling Search and Chrome with its Play Store and operating system; blocking phone manufacturers from running forked versions of Android; and paying phone manufacturers (such as Apple) and service providers to “exclusively pre-install the Search app on their devices”.

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The Commission said Google will need to stop preventing phone makers from using forked versions of Android because the company “did not provide any credible evidence that Android forks would be affected by technical failures or fail to support apps.”

Google decided to appeal the commission’s decision.

South Korea’s new law targetting app stores

Last month, South Korea went after Google and Apple by passing a first-of-its-kind bill that forces both companies to open their app stores to alternative payment systems. “As bills with similar implications are being proposed in the U.S. and Europe, South Korea’s bill will become a cornerstone for legislating app market platform regulations worldwide,” Chairman Han Sang-hyuk, Korea Communications Commission, said.

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