The Fair Trade Commission (FTC) has signaled it may impose a fine of up to about 850 billion won on Google, alleging the company signed unfair contracts with domestic and foreign game developers through its Google Play Store app market and restricted competitors' entry. Google was fined 42.1 billion won on similar charges in 2023, and now faces the FTC's review process again just three years later. With Google expected to announce a U.S. investment project as early as this month, some observers say the FTC's move to advance sanctions procedures against Google, following Coupang, could become a variable in Korea-U.S. trade negotiations.
The FTC said Monday that it had sent an examination report to the party under review regarding Google's alleged violation of the Fair Trade Act and had begun its deliberation process. The examination report is a document containing the facts of the violation and the sanction opinion, corresponding to an indictment in a criminal case. The parties under review are three entities: Google's U.S. headquarters, Google Korea, and Google Asia Pacific in Singapore.
Google is accused of signing "Google Velocity Program (GVP)" contracts with 22 domestic and foreign game developers, including Nexon and NCSoft, over a period of about six years and nine months from July 2019 to March this year. The contract, internally also called "Project Hug," was designed to have game developers provide in-app features, benefits, and launch timing favorably to the Google Play Store. In return, Google supported the game developers with costs for its own services such as cloud, advertising, and YouTube.
The FTC determined that the "most-favored-nation (MFN)" conditions set during this process were a key competition-restricting factor. In exchange for cost support, Google required that the Google Play Store be treated more favorably than, or at least equally to, competing app markets, which effectively restricted the game developers' entry into other app markets.
The FTC also concluded that Google strengthened its market dominance by obstructing the business activities of competing app markets such as One Store and even restricting game developers' attempts to build their own distribution channels. The Google Play Store's share of Korea's Android app market has remained above 80%. Related revenue was estimated at about $9.2 billion (about 14 trillion won).
The FTC judged this conduct to be a serious violation of the abuse of market-dominant position, and presented an opinion to impose a corrective order along with a fine of up to 6%. It is understood that the FTC also reviewed aggravating the fine, considering that this is a repeat violation. Google was previously fined 42.1 billion won for similar conduct. At that time, Google was brought before the FTC after providing benefits to game companies on the condition that they not release games on One Store.
The FTC drew a line against observations that this sanction could affect the $350 billion U.S. investment negotiations. Although the U.S. government has recently reacted sensitively to sanctions on its own companies, the FTC's position is that its decision was made according to the principles of law enforcement.
Jung Hee-eun, director general of the FTC's Market Monitoring Bureau, said, "This is a matter on which an antitrust civil lawsuit on the same issue has proceeded in the United States and a verdict has been finalized," adding, "We have not judged differently on the grounds that it is a company from a specific country." The FTC explained that it is the first among global competition authorities to begin administrative sanctions against this type of contract.
Google may submit a written opinion within eight weeks from the date it received the examination report, after which the final level of sanctions will be determined through a plenary session. Google said, "As we have faithfully cooperated with the investigation, we will do our best to demonstrate during the deliberation process that there was no violation of the law."
Meanwhile, the FTC has been imposing high fines on large-scale collusion cases one after another this year. About 1.7 trillion won was imposed in the flour, sugar, and paper collusion cases alone, and including cases such as the starch sugar collusion case that will soon be concluded, the total is expected to exceed 2 trillion won.
