Seoul antitrust watchdog investigates Google over app marketplace practices

By Kang Yoon-seung

SEOUL, July 1 (Yonhap) -- Seoul's antitrust watchdog said Wednesday it has launched an investigation into U.S.-based Google LLC, as well as its Singaporean and South Korean offices, over allegations of violations of the fair trade law involving game developers on its app marketplace.

The Fair Trade Commission (FTC) said its examiners' report showed Google has abused its dominance in the Android marketplace, with related sales totaling US$9.21 billion. Under the law, the watchdog may impose a fine of up to 6 percent of the amount following its deliberations.

This indicates the fine may reach up to 849.6 billion won ($547.3 million).

The FTC said Google signed the Games Velocity Program (GVP) agreements with major game developers at home and abroad to prevent their potential departure from its app marketplace.

The program centers on subsidizing game developers' costs for using Google services, such as Google Cloud and advertising, on the condition that they give Google most favorable treatment compared to other app marketplaces, including earlier release dates.

The FTC said its examiners had concluded that the agreements had significantly hindered game developers from entering rival app marketplaces, disrupting other platforms' business activities.

The watchdog noted that Google's app store, Google Play, has maintained a market share of more than 80 percent in South Korea's Android app market.

The examiners also determined that the GVP agreements had effectively forced game developers to engage in exclusive dealing with Google.

"While game developers did receive support from Google, it would have been virtually impossible for them to turn down such support, given Google's overwhelming market position," an FTC official told reporters.

"Even if game developers received financial support, they did not violate the fair trade act," the official added.

Google, meanwhile, has eight weeks to file written opinions regarding the examiners' report.

Shortly after the announcement, Google said it had not violated the law and pledged to fully explain its position during the FTC's deliberation process.

"Google Play has been engaging in a fair competition with other app marketplaces," a Google official said. "Google Play has provided various benefits to developers and users in South Korea."

"Google has been faithfully cooperating with the FTC's investigation, and we will spare no efforts to prove that there have been no violations of the law during the deliberation process."

In 2023, the FTC imposed a 42.1 billion-won fine on Google after finding that the company had offered game developers preferential placement on Google Play on the condition that they did not release their games on One Store, a major rival app marketplace.

Under South Korean law, fines may be increased by 20 to 40 percent if a company commits another violation within five years. The FTC, however, said the maximum fine remains at 849.6 billion won even after taking the potential increase into account.