Google Threatened with 850 Billion Won Fine in Korea
JAKARTA - Google is dealing with competition regulators again. This time it comes from South Korea. The technology giant is threatened with a fine of almost 850 billion won or around 547 million US dollars. Assuming a rate of Rp17,800 per US dollar, the value is around Rp9.7 trillion.
Korea JoongAng Daily, quoted Thursday, July 2, reported that the South Korean Fair Trade Commission or FTC has opened a case against Google. The regulator accused Google of abusing its dominant position in the app market to hinder rival app stores.
The FTC on Wednesday sent an inspector's report to Google. This document is similar to the prosecutor's indictment in the legal process. The report is the start of a formal review to determine whether Google has violated the law and what sanctions can be imposed.
The investigation began in November 2024. At that time, the Citizens' Coalition for Economic Justice and a number of civil society groups filed a complaint. They accused Google of colluding with the game company.
The crux of the matter is the Games Velocity Program or GVP. This program was launched by Google in 2019 to keep game developers from leaving the Play Store in order to avoid high commissions from in-app purchases.
A total of 22 developers with the largest revenue on Google Play signed the agreement. Among them are NCSoft, Netmarble, Activision Blizzard King, and Riot Games.
In the agreement, the developer promised to give Google the same or better terms than competing app stores. The form can be in the form of launching new games first on Google Play or equalizing the profits offered on other platforms.
In return, Google helps cover the cost of using Google services, including cloud computing and YouTube costs.
According to the FTC examiner, this pattern weakened the developers' incentive to distribute games through competitors, including One Store in South Korea. Google was also said to have hindered developers who wanted to create their own app stores in order to avoid Google's payment costs.
"We assess that Google, through its GVP contract, essentially forces game developers to transact exclusively with it," said Jeong Hee-eun, Director General of the FTC's Market Oversight Bureau, as quoted by Korea JoongAng Daily.
The FTC examiners called Google's actions a serious violation. They recommended an improvement order and a fine.
The FTC estimates that Google has reaped around 9.2 billion US dollars from practices that are considered to be in violation. Assuming a rate of Rp. 17,800 per US dollar, the amount is equivalent to around Rp. 163.8 trillion. Based on fair trade rules, the abuse of a dominant position can be fined up to 6 percent of the affected revenue. For Google, the value could reach around 849.6 billion won.
However, the final decision remains in the hands of the full FTC commission.
This is not the first time Google has stumbled upon a similar case in South Korea. In 2023, the FTC fined Google 42.1 billion won. At that time, Google was said to have helped the expansion of the company's overseas games and given a major placement in its store in exchange for new games not entering One Store.
This case could also add to trade friction between South Korea and the United States. A number of critics believe that US officials and companies are becoming more sensitive to the actions of foreign regulators targeting American technology giants.
The FTC dismissed those concerns. Jeong said the antitrust case against Google had gone through civil courts in the United States and the ruling was final.
According to the Korea JoongAng Daily, a federal jury in California in 2023 ruled that Google illegally maintained a monopoly through the Play Store. The ruling was upheld on appeal last year.
The case in the United States also highlights a payment pattern similar to the case in South Korea. Google is said to have channeled hundreds of millions of US dollars to game developers through the Games Velocity Program to maintain the dominance of the Play Store.