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South Korea antitrust regulator fines Google nearly $177M

The Korea Fair Trade Commission announced Tuesday a nearly $177 million fine on Google over anti-competitive practice. File Photo by George Dolgikh/UPI/Shutterstock
The Korea Fair Trade Commission announced Tuesday a nearly $177 million fine on Google over anti-competitive practice. File Photo by George Dolgikh/UPI/Shutterstock

Sept. 14 (UPI) -- South Korea's antitrust regulator said Tuesday it has imposed a nearly $177 million fine on Google over allegedly abusing its market dominance.

The Korea Fair Trade Commission has accused the tech giant, whose Android operating system dominates over 80% of the smartphone market worldwide, of squeezing out competition, Bloomberg reported.

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In particular, the regulator found that the anti-fragmentation agreement, which Google makes smartphone makers sign for contracts, impedes competition and undermines innovation, Yonhap News reported.

Under the AFA, device makers, including Korean companies Samsung and LG, are not allowed to develop or use modified versions of Android OS known as "Android forks" on their devices.

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Along with the nearly $177 million fine, the KFTC also banned Google from forcing manufacturers to sign AFA contracts going forward and ordered it to modify existing contracts.

A Google spokesperson told CNBC in a statement the company plans to appeal the decision.

The spokesperson explained that the regulator did not consider Android's compatibility program, which accelerated innovation and improved user experience.

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"The KFTC's decision released today ignores these benefits, and will undermine the advantages enjoyed by consumers," the spokesperson told CNBC in the statement.

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CNBC noted that the regulator's fine is small in comparison to Google's parent company Alphabet's nearly $62 billion in revenue reported in the last quarter.

Still, the decision follows other efforts by South Korean lawmakers and regulators to reign in the tech giant's market dominance.

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On Aug. 31, South Korean lawmakers passed a bill into law, which revises the country's Telecommunications Business Act, to allow app developers to avoid paying commissions to store operators, such as Google and Apple, for in-app purchases by using third-party apps instead. The new law allows the country's media regulator to fine violators up to 3% of their annual South Korean revenue.

More recently, the KFTC has turned its attention to local online platforms, Kakao and Naver. KFTC vice chairman Kim Jae-shin said during a policy symposium Friday the agency was looking to cracking down on online giants that unfairly use market dominance, adding that Kakao and Naver have abused their roles to drive traffic to their products and services.

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