S. KOREA FINES GOOGLE FOR DOMINANCE ABUSE

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Most smartphone manufacturers, except for Apple, use Google’s Android for their operating system. Now Google has been slapped with more than 200 billion won in fine for using its monopolistic position to force the smartphone manufacturers to load their devices only with the Android OS. This is the second largest fine imposed on a company for abusing its market dominance.

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Samsung rolled out its smart watch lineup in 2013. It had applied an operating system customized for its smart watches. In less than a year, however, Samsung had to give up the OS. LG's attempt to market its smart speaker with a modified OS was also thwarted in 2018. Google took issue with these devices for violating its anti-fragmentation agreement, or AFA.

[Soundbite] Kim Duk-jin(Asst. Dir., Korea Insight Institute) : "It’s more efficient for manufacturers to use OS forks or customized OS for software maximization. But Google wanted the manufacturers to use only its OS."

The AFA has been in effect since 2011. Under the agreement, local manufacturers are prohibited from developing or using customized operating systems. If they didn't sign the AFA then the manufacturers were barred from using Google's Play Store app market. Play Store accounts for 95% of the app market outside of Apple and has the most number of apps. The Korea Fair Trade Commission concluded that local manufacturers were compelled to sign the agreement in order to access Play Store. =The KFTC defined such action by Google as an anti-competitive practice that prevents its OS rivals from entering the market, undermining innovation.

[Soundbite] Joh Sung-wook(KFTC Chairman) : "This case is about undermining innovations in other smart device OS development, in which next-generation platform competition is underway, by prohibiting OS forks."

The KFTC ordered the tech giant to correct the situation and pay a fine of 207. 4 billion won. This is the second largest fine for monopolistic practices, next only to one trillion won levied on Qualcomm in 2016. Google claimed that the KFTC did not consider the benefits manufacturers and consumers enjoy from using Android. The firm says it will appeal the decision.