South Korea fines Google $177 million for blocking Android competition

South Korea fines Google $177 million for blocking Android competition

Google abused its market position by thwarting efforts that could have spawned competing mobile operating systems and delayed the release of new products and services, the Korea Fair Trade Commission said Tuesday.

South Korea fined Alphabet Inc.’s Google around $177 million for obstructing other companies from developing rival versions of the Android operating system, the latest challenge to the U.S. technology giant’s dominance in mobile software.

Under the new order, Google can no longer force device manufacturers to sign so-called anti-fragmentation agreements, which had prevented those companies from developing or using altered versions of the Android operating system. The contracts were required to have access to Google’s app store and the latest Android updates before their public release. The new measure also requires Google to rewrite existing arrangements

Google will appeal the South Korean regulator’s decision, a spokeswoman said. Android, which is made available for free to device makers, has spurred innovations and given consumers greater choice, quality and user experience, she added.

Google’s digital clout has attracted legal scrutiny in the U.S., Europe and elsewhere, as regulators and other officials try to curtail the company’s dominance in web search, online advertising and smartphones. Android is the world’s most-popular mobile operating system, used in billions of devices.

South Korea’s antitrust regulator said it was also investigating fair trade issues with Google’s app store practices, in-app purchases and advertising.

The South Korean ruling is likely to lead to more device manufacturers pushing forward with altered versions of Android, said Tom Kang, a Seoul-based research director at Counterpoint Research. But to prevent that, Mr. Kang added, Google may have to offer incentives to tech giants to keep the Android ecosystem unified.

By blocking modified versions of Android, Google crowded out potential competitors, South Korea’s FTC argued. For example, Amazon.com Inc. failed to launch a modified version of Android, after not being able to secure partners including LG Electronics Inc. and Samsung Electronics Co. to build new devices that ran on Amazon’s altered Android operating system, the regulator said.

The KFTC also cited Samsung, LG and Alibaba Group Holding Ltd. as other examples of companies that were unable to launch new gadgets because of Google’s restrictions. “Google’s anti-fragmentation agreement blocked the entry of competitors to the mobile operating system space and obstructed business innovation by device manufacturers,” said KFTC chairperson, Joh Sung-wook, at a briefing.

South Korea’s antitrust action came on the same day that the country enacted the world’s first law mandating Google and Apple Inc. open up their app stores to alternative payment systems. For purchases made outside of Google or Apple’s payment systems, South Korean companies wouldn’t have to pay a 30% commission to the U.S. tech companies. The law was enforced starting Tuesday, with violations subject to a fine, said Han Sang-hyeok, chairman of the Korea Communications Commission, though the specific guidelines are still being ironed out to ensure fairness for Google, Apple and local developers.

This story has been published from a wire agency feed without modifications to the text  

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