[2020 National Audit] "Google Shared Revenue with Phone Manufacturers for Pre-installation"

Rep. Yoon Young-chan: "Google Shares Revenue with Manufacturers like Samsung and LG for Pre-installation"
Rep. Kim Sang-hee: "Is it true they gave tens of billions of dollars?"... Google: "Contract Confidential"

Content of the US House Subcommittee Report on Google's Antitrust Lawsuit Released by Representative Yoon Young-chan (Source: Screenshot from the Science, ICT, Broadcasting and Communications Committee Hearing Video)

[Asia Economy Reporter Han Jinju] The U.S. Department of Justice report stating that Google shared profits with smartphone manufacturers to pre-install its apps was also mentioned during the National Assembly audit. The internet and startup sectors, which have criticized Google's increase in in-app payment fees, expressed regret, signaling a potential escalation of controversy over Google's alleged abuse of power.

At the National Assembly Science, Technology, Information and Broadcasting and Communications Committee audit on the 22nd, Yoon Young-chan, a member of the Democratic Party of Korea, pointed out, "If you read the documents and reports filed by the Department of Justice to the U.S. House Judiciary Committee, it includes content showing that manufacturers actively cooperated and signed profit-sharing agreements to strengthen Google's antitrust position and exclude competitors."

Yoon said, "Google demanded AFA (Anti-Fragmentation Agreement) agreements from manufacturers such as Samsung Electronics and LG Electronics, and through this, set up various measures to block third parties that create modified Android versions that deviate from Google's proposed technical standards from entering via manufacturers," adding, "Manufacturers sign pre-installation contracts to pre-install APIs and core apps proposed by Google and receive profit sharing from this."

Yoon stated, "Google has dominated the global search and app store markets, and our companies have actively cooperated, so it is necessary to grasp the actual situation regarding this part." Minister Choi Ki-young of the Ministry of Science and ICT responded, "We will look into it."

Content of the U.S. House Subcommittee Report on Google's Antitrust Practices Released by Representative Yoon Young-chan (Source=Captured from the Science, ICT, Broadcasting and Communications Committee Hearing Video)

There were also allegations that Google paid billions of dollars in exchange for app pre-installation, but Google did not respond, citing trade secrets.

Kim Sang-hee, a member of the Democratic Party of Korea, said, "I understand that Google provided billions of dollars to smartphone manufacturers to enable monopoly over search and OS, but this has not been disclosed due to trade secrets," and asked, "There are rampant rumors that huge amounts are being distributed to Korean manufacturers and telecom companies; can you confirm this?" Executive Director Lim did not answer, citing "contractual confidentiality clauses."

Yoon said, "I requested data on profit-sharing agreements Google made with Samsung and others, but was refused due to confidentiality," and criticized, "The U.S. government is thoroughly investigating whether such contracts exist, but it is unacceptable that our government cannot even grasp this." Minister Choi replied, "There is no situation where we can force the provision of data."

Hong Jung-min, also from the Democratic Party, pointed out that app pre-installation is an abuse of monopoly power. In response, Lim Jae-hyun, Executive Director of Google Korea, said, "About 10 apps are pre-installed on smartphones; although it varies by manufacturer device, all apps can be deleted, and this policy is improved every year."

Lim Jae-hyun, Executive Director of Google Korea, appeared as a witness at the comprehensive government audit on the Office for Government Policy Coordination held at the National Assembly's Political Affairs Committee on the 22nd, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

It was also revealed during the audit that domestic telecom companies receive 15% out of the 30% in-app payment (mobile payment) fees from Google.

The Korea Internet Corporations Association and Korea Startup Forum issued a statement saying, "The three telecom companies that share in-app payment revenue must immediately stop actions that multiply harm to the public," and "Mobile phone manufacturers must immediately stop cooperating with Google and Apple in forming dominant market positions in operating systems and app markets."

The Korea Internet Corporations Association and Korea Startup Forum stated, "The fact that Android secured over 70% market share in Korea was possible because mobile phone manufacturers shared profits from Google, and ultimately, domestic companies cooperated in the domination of the domestic market by foreign companies, which is deplorable," adding, "Mobile phone manufacturers must immediately stop cooperating in the domestic market domination by foreign companies and strive for fair competition in mobile phone operating systems and app markets, as well as protection of app developers, consumers, and other users."