Google's app market practices under scrutiny in South Korea; fine could reach $615 million

South Korea's Fair Trade Commission (KFTC) has initiated an investigation into Google LLC, Google Asia Pacific Pte. Ltd., and Google Korea for alleged violations of the Fair Trade Act. The probe centers on accusations that Google abused its dominant position in the Android app market, potentially leading to a substantial fine.

According to the KFTC's investigation, Google entered into 'Games/Google Velocity Program' (GVP) contracts with major domestic and international game companies between July 2019 and March 2023. These agreements were reportedly designed to prevent these companies from migrating to other Android app markets due to high in-app payment fees. Key companies like Activision Blizzard King, Riot Games, NCSoft, and Netmarble were part of this program.

The GVP contracts allegedly stipulated that game companies must offer preferential or equal terms, including game launch dates, to Google's app market compared to competitors. In return, Google provided support for its platform services such as Google Cloud, Google Ads, and YouTube. The investigation found that the support amount increased progressively as Google's app market revenue grew, creating a tiered incentive structure.

KFTC investigators concluded that Google's contractual conditions significantly hindered competitors' ability to attract game companies, thereby obstructing the business activities of rival app markets like One Store. The commission also determined that these contracts effectively compelled game companies into exclusive dealings with Google. The total related sales affected by these alleged practices are estimated at $9.217 billion (approximately 14.16 trillion won). Considering the maximum penalty for abuse of a dominant market position, which is 6% of related sales, Google could face a fine of up to 849.6 billion won.