Korea's antitrust watchdog flags Google for app market abuse, warns of up to 850 billion won fine

The Korea Fair Trade Commission has warned Google it could face a fine of up to 850 billion won ($549 million) for allegedly requiring preferential treatment from game developers listed on the Play Store, a practice the regulator says restricted competition in the app market.

Google was already fined more than 40 billion won in 2023 for offering game developers promotional support on the condition they did not release apps on rival store One Store — making this the second enforcement action against the company in just three years.

The Fair Trade Commission's secretariat said Tuesday it had sent Google a written examination report alleging violations of the Monopoly Regulation and Fair Trade Act, formally opening the sanctions process. The report is the equivalent of a criminal indictment.

The named respondents are Google LLC of the United States, Google Asia Pacific Pte. Ltd. of Singapore, and Google Korea LLC.

An examination report sets out the facts and recommended sanctions identified by the commission's examiners. Its delivery to the respondent marks the start of the formal enforcement procedure.

Google entered into contracts — known internally as the GVP, or Games/Google Velocity Program — with major domestic and foreign game developers after those developers began looking to leave the Play Store over its high in-app payment commission fees, which take a percentage of each paid transaction.

Under the agreements, game developers were required to give the Play Store launch timing, quality and other conditions at least as favorable as those offered to rival app markets. In return, Google subsidized each developer's use of its platforms, including cloud services, its Ads tool and YouTube.

The 22 companies that signed the agreements include five South Korean developers — Netmarble, NCsoft, Nexon, Com2uS and Pearl Abyss — along with 17 foreign firms, among them Activision Blizzard King and Riot Games.

Contract terms varied by company, but the agreements collectively ran from July 2019 through March this year, the Fair Trade Commission said.

A notable feature of the contracts was their progressive structure: the more revenue a developer generated through the Play Store, the larger the subsidy it received from Google.

Commission examiners concluded that this arrangement significantly reduced each developer's incentive to list on competing app markets.

The progressive structure in particular, examiners said, in effect forced each developer into an exclusive relationship with Google.

The arrangement obstructed the business activities of rival app markets such as One Store. Google Play's share of the domestic Android app market remained above 80 percent throughout the period.

Examiners also found that the contracts blocked some game developers from launching their own app stores.

Jeong Hee-eun, director of the Fair Trade Commission's Market Surveillance Bureau, said the game developers had little real choice but to accept Google's support. "Although the game companies received subsidies from Google, Google's position in the transaction was so overwhelmingly dominant that it would have been practically impossible for them to refuse," she said, adding that receiving financial support does not in itself constitute a violation of the Fair Trade Act.

Asked whether the commission had been mindful of US sensitivities over actions targeting American companies, Jeong rejected the suggestion. "This is not a matter the Fair Trade Commission identified on its own," she said. "A civil antitrust lawsuit over this same conduct has already been litigated and a ruling confirmed in the United States."

Google's domestic sales attributable to the alleged abuse of market dominance were calculated at $9.22 billion (about 14.16 trillion won).

Examiners characterized the GVP contracts as a serious violation and recommended both a corrective order and a fine.

The commission may impose a fine of up to 6 percent of the relevant sales after deliberation under applicable regulations, which would amount to a maximum of 849.6 billion won.

In 2023, Google was found to have offered game developers top-of-page placement and overseas expansion support on the condition that they did not release apps on One Store, resulting in a fine of 42.1 billion won and a corrective order.

Because a repeat violation was detected within five years, applicable guidelines allow the fine to be increased by 20 to 40 percent.

However, a Fair Trade Commission official said the ceiling would remain unchanged. "Even with the surcharge applied, the maximum fine stays the same — 849.6 billion won," the official said.

Google has eight weeks from receipt of the examination report to submit a written response and request access to evidence materials as part of its right to defense.

The commission said it plans to reach a final decision as quickly as possible, describing the case as critical to restoring genuine competition in the app market.