South Korea fines Google for blocking Android customization

Google was fined $176.64 million and intends to appeal the decision:

South Korea’s antitrust regulator has fined Alphabet Inc’s Google 207 billion won ($176.64 million) for blocking custom versions of its Android operating system. It was the second major setback for the US tech giant in the country in less than a month.

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The Korean Fair Trade Commission (KFTC) said on Tuesday that Google’s contract terms with device makers represent an abuse of a dominant market position that has restricted competition in the phone operating system market mobile.

Google said in a statement that it intends to appeal the decision, saying it ignores the benefits offered by Android’s compatibility with other programs and undermines advantages that consumers take advantage of.

“The decision by the Korean Fair Trade Commission is significant because it offers an opportunity to restore future competitive pressures to the operating system and application markets,” Commission Chair Joh Sung-wook said in a statement.

The Commission said Google hampered competition by forcing device makers to comply with an “anti-fragmentation agreement (AFA)” by signing key agreements with it regarding app store licenses.

Under the anti-fragmentation deal, manufacturers could not equip their devices with modified versions of Android, known as “Android forks”. This helped Google cement its dominance of the operating system market, the commission said.

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Under the ruling, Google is prohibited from forcing device makers to sign anti-fragmentation contracts, allowing them to adopt modified versions of the Android operating system on their devices.

In one example, Samsung Electronics Co Ltd released a smartwatch with a custom operating system in 2013, but switched to a different OS after Google deemed the measure a violation of the anti-fragmentation agreement, the Commission said. Samsung Electronics declined to comment.

The fine comes on the day an amendment to South Korea’s Telecommunications Business Act dubbed the “anti-Google law,” takes effect.

The law passed in late August and prohibits app store operators such as Google from requiring software developers to use their payment systems. In practice, this requirement prevented developers from charging a commission on in-app purchases.

Last year, India’s antitrust agency ordered an investigation into allegations that Google was abusing its market position to promote its payments app, and also forcing app developers to use its in-app payment system.

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