Google hit with huge fine in South Korea over use of its Android system

Seoul, South Korea - Google was fined $176.5 million on Tuesday by South Korea's competition authority (KFTC), which accuses the company of trying to block device makers from developing alternative versions of Google's Android operating system.

Google said it will fight the fine and appeal the ruling handed out on Tuesday.
Google said it will fight the fine and appeal the ruling handed out on Tuesday.  © IMAGO / ZUMA Wire

The ruling requires Google LLC, Google Asia Pacific, and Google Korea – all subsidiaries of the US company Alphabet – to give up the practice.

The KFTC noted that the fine's final value is not yet fixed and could rise after further investigation.

Within hours, Google said it would appeal.

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Google argued that, while the court is arguing that the company is taking advantage of its dominant market status, the court is ignoring the benefits its Android software provides for companies that install it.

The company said Tuesday's ruling ignores the hardware, software, and innovation benefits its product provides, both for the Korean manufacturers and for their customers.

But the KFTC argues that South Korean-based smartphone makers, like Samsung or LG that want to use Android apps or services, are required to sign contracts that come with multiple limitations. That, the authority argued, limits competition.

The ruling would block Google from requiring partners to sign the so-called anti-fragmentation agreements, which prevent device makers from modifying the Android system and allowing the use of those altered systems on their products.

The changes, for example, could be used to make phones that run on Google's operating system, but offer in-house services instead of those from Google.

The decision comes on the heels of the passage of legislation in South Korea that keeps the operators of app marketplaces, like Apple and Google, from requiring that in-app purchases use the providers' payment systems.

The law went into effect on Tuesday.

Cover photo: IMAGO / ZUMA Wire

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