South Korea alleges Google forces software on smartphones

SEOUL, South Korea: In what could be one of South Korea's largest-ever antitrust cases, Google has been fined at least $177 million for allegedly blocking smartphone manufacturers, including Samsung, from using other operating systems.

South Korea has begun to enforce a revised telecommunications law disallowing app market operators, such as Google and Apple, from requiring smartphone users to pay with Google's in-app purchasing systems, making it the first nation to adopt such regulations.

Joh Sung-wook, chairwoman of South Korea's Fair Trade Commission, said Google has hampered competition since 2011 by obligating its electronics partners to sign "anti-fragmentation" agreements. This has prevented the companies from installing modified versions of Google's operating systems on devices, like smartphones and smartwatches. That allowed Google to cement its leadership in mobile software and app markets, she said.

However, Google said it plans to challenge the fine.

In an emailed statement, Google said the FTC is ignoring Android's compatibility program, which defines the requirements for device makers and developers to achieve compatibility with the operating system, which has spurred "incredible hardware and software innovation, and brought enormous success to Korean OEMs (original equipment manufacturers) and developers."

"This in turn has led to greater choice, quality and a better user experience for Korean consumers," Google said. "KFTC's decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers. Google intends to appeal the KFTC's decision,"

Kim Min-jeong, another FTC official, said the amount of the fine announced by her commission was tentative, based on the revenue Google generated in South Korea from 2011 to April this year. She said the finalized fine, which could be announced in October or November, might be slightly higher.

The FTC began examining the case against Google in 2016 and is conducting other investigations of Google, including its behavior in mobile applications and advertising markets.

Tech giants face global criticism over forcing developers to use in-app purchasing systems, for which the companies receive commissions of up to 30 percent. The companies say the commissions help pay for the cost of maintaining the app markets.