South Korea Fines Google $32M Over Unfair Competition in App Market

South Korea's Fair Trade Commission fines Google $32 million for engaging in anticompetitive practices, impacting the growth of local rival app store, OneStore.

South Korea Fines Google $32M Over Unfair Competition in App Market

Tuesday April 11, 2023,

2 min Read

South Korea's Fair Trade Commission (KFTC) has imposed a $32 million fine on Google for engaging in anticompetitive practices against local rival app store OneStore. Launched in 2016 by South Korea's top three telcos—SK Telecom, KT, and LG Uplus—and internet giant Naver, OneStore aimed to challenge Google's dominance in the app market.

However, as OneStore emerged, Google informed developers that their products would not be featured on the Play Store if they also chose OneStore as a platform. The tech giant further incentivised developers by promising assistance in entering markets outside South Korea if they committed to exclusive use of Google Play within the country. This led to a decline in OneStore's market share from 15-20% in 2016 to 5-10% in 2018, while Google's share rose from 80-85% to 90-95% during the same period.

The KFTC's fine is an attempt to ensure fair competition in the app market and prevent Google from leveraging its dominant position. The regulator highlighted the impact on gaming companies, including large firms like NCSoft, Netmarble, and Nexon, as well as smaller developers.

Google, however, disputes the KFTC's conclusions. A spokesperson stated that the company has "cooperated diligently" with the investigation and believes that "there has been no violation of the law." They also emphasised Google's substantial investments in developers' success, adding that they will "carefully review the final written decision" to determine the next course of action.

This fine marks Google's third recent conflict with South Korean competition authorities. In 2021, the company faced a $177(₩207 billion) million fine for abusing its market dominance in mobile operating systems by prohibiting Android forks. Additionally, in 2022, Google encountered regulatory issues in South Korea for not complying with laws mandating third-party payment processors' inclusion in the Play Store. In the same year, the company was also fined $50 million for privacy violations in South Korea.

Despite these setbacks, OneStore has become the country's second-largest app store, securing investment from Microsoft and Deutsche Telekom in 2021 to help it target international markets and create more competition for Google.