South Korea Regulators Are Latest to Open Antitrust Probe of Google

By Jaikumar Vijayan  |  Posted 2016-08-12 Print this article Print

The focus of the investigation appears to once again be on Google's Android bundling practices.

The same week that authorities in Russia slapped Google with a $6.8 million fine for its Android bundling practices in the country, regulators in South Korea have opened an investigation against the company for what appears to be the same reason.

The Korea Fair Trade Commission (KFTC) is looking at whether Google's business practices are in violation of antitrust laws in the country, the Wall Street Journal and several other media outlets reported Friday.

The focus of the investigation apparently is on Google's app-bundling requirements for Android handset makers, the Journal said. It is the same issue that earned Google the multimillion-dollar fine in Russia this week. And it is one of three Google business practices that are under regulatory scrutiny in the European Union as well.

The concerns have to do with a Google bundling policy that requires Android handset makers that want to preinstall Google Play on their devices to also preinstall other Google apps including Search and Maps. Rivals have complained the policy is unfair and makes it harder for Android handset makers to preinstall competing applications from other developers.

This is not the first time the KFTC has investigated Google's practices in South Korea. In 2013, the commission dropped antitrust charges against Google after finding no wrongdoing on the company's part. Last month, the commission released a statement explaining that decision after a media report raised questions about how the commission had handled its investigation.

The KFTC said it had decided to drop charges against Google in 2013 because the impact of the company's practices in the domestic market was really small at the time. The KFTC said it had considered several factors such as South Korea's mobile market and Google’s share of the internet and mobile search markets in arriving at the decision. "In particular, when considering the fact that Google's market share in mobile search market was 11.7%, and year-on-year share dropped for two consecutive years, the KFTC concluded that it would be unlikely for anti-competitive effects to actually occur."

It is unclear what might have prompted the apparent change of heart on the KFTC's part. Korea's antimonopoly laws currently define a company to be market dominant if it has at least a 50 percent market share and if certain other conditions pertaining to barriers to entry and size of competitors are met.

The KFTC has the authority to take administrative action against a company in violation of antitrust laws. Available actions include proscribing practices that are in violation of domestic laws and ordering price reductions. It also has the authority to impose penalties of up to 3 percent of a company's revenues in the country.

According to the Journal, Google and the South Korean government have been sparring on another issue as well. Google apparently has for some time now wanted the South Korean government to lift certain restrictions that Google says makes it harder for the company to deliver its Google Maps service in Korea.

The government's apparent delay in acceding to Google's request has resulted in Google's Map service in South Korea being of inferior quality to Maps in even countries like North Korea.

Google did not respond to a request seeking comment on the new investigation.

Korea adds to the growing list of countries currently looking into whether Google is abusing its market dominance to muscle rivals out. Google itself has tended to underplay these investigations and has portrayed itself as largely the victim of unfounded accusations by envious rivals.


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