South Korea’s telecommunications regulator said on Friday that Alphabet Inc’s (GOOGL.O) Google and Apple Inc (AAPL.O) have abused their dominant app market position and warned them of possible fines totaling up to $50.5 million. The Korea Communications Commission (KCC) said in a statement that the two tech giants forced app developers into specific payment methods and caused unfair delays in app review, which violated the country’s telecommunication business law, Reuters reported.
The KCC also alleged that Google and Apple enforced exclusive contracts with mobile device manufacturers that forced them to use only the US tech companies’ in-app payment systems, from which they take sales cuts. This violated a law passed last year that many have dubbed an “anti-Google” bill. The law, which came into effect in March 2021, prohibits app store operators from forcing software developers to use their billing systems, according to the KCC statement.
Apple and Google have both denied the allegations. A Google spokesperson told CNBC that the company is not guilty of violating the fair trade law and argued that Android’s policies allowed Korean developers to thrive and created opportunities for innovation. The spokesperson added that the KFTC’s decision ignores these benefits for consumers.
Meanwhile, a spokesman for Apple told Reuters that the company disagrees with the KCC’s conclusions. The company said it will carefully review the KCC’s notification and evaluate its next course of action after evaluating the KCC’s final written decision. Apple has also released a segment on the issue that refutes the claims.
South Korea has been cracking down on abuse of its dominant smartphone market. In May, the government imposed its most significant fine yet on Samsung Electronics Co Ltd for failing to comply with the country’s fair trade laws in its distribution of mobile phones. It was one of the most significant fines issued by a government agency and the second largest ever imposed on a private corporation.
In addition, it is now illegal for foreign firms to import and sell smartphones without obtaining a state-backed Korean Communications Commission license. The new policy aims to prevent monopoly practices and promote competition in the mobile phone market. It is the first time the Korean authorities have enacted such a law. The move is a part of the country’s ongoing efforts to promote fair competition in its rapidly growing economy. The Korean government has been focusing more on competition issues in recent years as it tries to break its export dependence and become a self-sufficient economy. This has been reflected in increased antitrust investigations, particularly in the technology sector. This has led to several antitrust cases against significant multinationals in the region. However, it is still challenging to get any convictions against these companies. Nevertheless, the new law will provide additional incentives for companies to comply with the fair trade laws and avoid penalties. This will encourage the growth of the country’s fair and healthy mobile app market.
