Saturday, September 26, 2020

FTC takes aim at Google’s OS monopoly

Sep 10. 2020
FTC Chairperson Joh Sung-wook (FTC)
FTC Chairperson Joh Sung-wook (FTC)
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By The Korea Harald
Shin Ji-hye

South Korea’s antitrust watchdog has set out to determine whether Google’s monopoly on mobile operating systems and app markets blocks the emergence of rival OSs and app markets.

“Currently, the regulator is focusing its investigation on whether operators who dominate the mobile OS market obstructed the production of devices equipped with rival OS, or by forcing app developers to exclusively launch their apps on its app markets,” Fair Trade Commission Chairperson Joh Sung-wook said during an online press conference held Tuesday to mark the first anniversary of her inauguration. 

“If illegal acts are found during the investigation, we will take stern action in order to restore the competitive order,” she added. 

Although the FTC head did not mention the company by name, her remarks appear to target Google, which is by far the most popular smartphone OS in the world.

Since 2017, the authorities have been investigating allegations that Google interfered with the development of Samsung Electronics’ own mobile operating system such as by disallowing the use of its Android algorithm.

Google is also alleged to have forced Korean game companies to release apps only on its application platform, Google Play, in an attempt to exclude local app markets such as One Store. 

“In this sector, the market share of the first movers is very high. This issue can be problematic if market-dominating companies exclude new businesses by using their monopoly. It can affect app developers and ultimately harm consumers,” Joh said. 

Google’s mobile operating system has a market share of more than 70 percent in Korea. 

Its share in the app market here reached 63.4 percent as of the end of last year. Apple followed with 24.4 percent. One Store, a Korean app market made by Naver and three domestic mobile carriers, holds a 11.2 percent share. 

Recently, in July, the European Union imposed a fine of around $5 billion on Google for abusing the dominance of its Android OS. The regulator said the US tech giant forced handset makers to preinstall Google’s Chrome browser and prevented them from selling phones that run other rivals’ modified versions of Android.

The chairperson also mentioned the recent controversies surrounding Google’s move to adopt an in-app purchasing system for its Google Play Store. 

“We are also keeping a close eye on whether (Google’s move to) change the fee system in the app market will affect competition and consumer welfare. We will collect opinions from experts through various academic conferences and symposiums and work closely with the Korea Communications Commission and the Ministry of Science and Technology,” Joh said. 

Google is moving to make it mandatory for companies that make non-game apps -- such as webtoons, web novels, and music-streaming and online video services -- to use the Google in-app purchasing system. 

In-app purchasing refers to the buying of goods and services from inside apps. When payments are made within the app, some portion of the total sales go to the platform operator, Google, as a commission. Currently, local game app developers give Google 30 percent of their sales in return for using Google’s in-app purchasing system.

But is difficult for the government to intervene in such practices as doing so can distort the market, which depends on supply and demand, industry watchers said. 

Joh said the FTC will announce legislation tentatively called the Online Platform Fairness Act within this month to prevent unfair trade by large online platform companies, which have become intermediary dealers that link sellers and consumers.

On Wednesday, Rep. Cho Seung-rae of the ruling Democratic Party of Korea proposed changes to the Telecommunications Business Act that would prevent app market operators from forcing in-app purchasing. 

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