Fair Trade Commission imposes 42.1 billion won fine on Google for obstructing One Store... Platform regulation intensifies

Fair Trade Commission issues corrective order and imposes 42.1 billion KRW fine on Google

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The Korea Fair Trade Commission (KFTC) has imposed a fine of 42.1 billion KRW on Google for blocking mobile game companies from releasing games on a competing app market, One Store. This comes five years after the investigation into Google, which was suspected of abusing its power over game companies. The KFTC determined that Google, a monopolistic player in the app market, actively restricted market competition to exclude One Store, a prominent domestic app market player.

On the 11th, the KFTC ruled that Google (Google LLC, Google Korea, Google Asia Pacific) abused its market-dominant position under the Monopoly Regulation and Fair Trade Act (Fair Trade Act) and decided to impose corrective orders along with a fine of 42.1 billion KRW.

"Release games only on Google Play" - Google's anti-competitive behavior

As the overwhelmingly dominant player in the app market, Google offered mobile game companies benefits such as app market featuring and overseas expansion on the condition that they do not release games on One Store. Featuring refers to placing games in the most visible spot (front page) when consumers open Google Play. Domestic mobile game companies have recognized that support such as Google’s overseas featuring is crucial for successful overseas expansion. Google exploited this situation by actively offering benefits that could be enjoyed only if the same games were not released on One Store.

Google established this “exclusive release conditional support strategy” in 2016 and implemented it until April 2018. Specifically, Google classified game companies into tiers based on sales share and the possibility of simultaneous release on One Store, and devised response strategies to secure exclusive releases for each tier. For the top four companies by sales share, Google provided comprehensive support including overseas expansion, joint marketing, and featuring on the condition of exclusive release. For game companies ranked just below the top four, selective support for overseas expansion was provided for important games.

Google believed that to block One Store’s growth, it was necessary to prevent important games from going to One Store. The emergence of One Store, a domestic app market formed by integrating the app markets of the three major telecom companies and Naver in 2016, was analyzed as a significant threat to Google’s Korean business revenue. The KFTC confirmed Google’s strategy through internal documents, emails, and employee memos. Internal Google documents set the exclusion of One Store as a performance goal, sharing execution objectives such as “continuously securing important games for exclusive release on Google.” The KFTC judged that Google’s exclusion of One Store was deliberately executed with a clear objective.

"Google tried to leave as little evidence as possible... aware of potential Fair Trade Act violations"

This was carried out in a covert manner. According to internal meeting minutes and memos from Google Korea reviewed by the KFTC, Google was aware of the potential violation of the Fair Trade Act and conveyed the exclusive release conditions to game companies as discreetly as possible. Furthermore, Google requested deletion of related emails within the company and encouraged offline discussions to minimize leaving evidence.

As a result of Google’s exclusive conditional trading practices, competition in the app market was restricted. One Store faced great difficulties in securing newly released games, making normal business operations impossible. Since its launch in June 2016, One Store failed to properly secure content to offer consumers, leading to a decrease in paid users and a decline in platform value. Meanwhile, the number of paid users for games on Google Play increased by about 30%. Google’s market share in the domestic app market rose from around 80% in 2016 to over 90% in 2018, strengthening its monopoly power. Market Surveillance Bureau Director Yoo Sung-wook said, “One Store’s market share rebounded after the end of the conduct period (due to the KFTC investigation). This shows the competitive restriction effect of this case.”

Accordingly, the KFTC applied violations of the Fair Trade Act’s “abuse of market-dominant position through exclusive conditional transactions” and “unfair trade practices through exclusive conditional transactions” to Google and ordered corrective measures. Google is prohibited from supporting overseas expansion, featuring, etc., on the condition that games are not released on competing app markets, and must establish an internal monitoring system to prevent recurrence and report its operation results to the KFTC. The provisional fine is 42.1 billion KRW.

The KFTC stated that this measure “is significant in curbing the actions of a giant platform operator to maintain and strengthen its monopoly power in the mobile app market,” adding, “Monopolization of the app market can adversely affect the entire related mobile ecosystem, so restoring competitive pressure in this market is of utmost importance.” It also added, “This is meaningful as part of establishing a fair market order emphasized by the Yoon Seok-yeol administration, creating fair competition conditions in the app market.”

This content was produced with the assistance of AI translation services.