Fair Trade Commission Targeting 'Google, Kakao, Coupang'

Google Under Investigation for 'Forced OS Pre-installation' and Three Other Cases Including App Market
Kakao and Coupang Also Likely to Face Fair Trade Commission's Scrutiny

Jongwook Cho, Chairman of the Fair Trade Commission. (File photo)

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC) is focusing its attention on major online platform companies such as Google, Kakao, and Coupang. At a recent announcement regarding sanctions on Google's forced installation of the Android operating system (OS), the KFTC unusually mentioned that three other Google-related cases are still under investigation. Some insiders say this signals that "the KFTC's full-scale platform sanctions have now begun."

On the 14th, the KFTC imposed corrective orders and a fine of 207.4 billion KRW on Google for forcing smart device manufacturers like Samsung and LG to pre-install its Android OS. Chairman Cho Sung-wook announced the sanction results and revealed, "The ICT task force is currently investigating three additional cases involving Google, including app market competition restrictions, forced in-app payments, and the advertising market," signaling further sanctions against Google.

Among the Google-related issues under review by the KFTC, the case most likely to reach a conclusion first is the restriction of competition in the app market. Since 2018, the KFTC has been investigating allegations that Google forced domestic game companies such as Nexon, NCSoft, and Netmarble to release their apps exclusively on its app market, the Play Store. The KFTC sent a review report to Google in January of this year.

The KFTC is also investigating complaints regarding forced in-app payments. In-app payments require apps listed on a company's app market to use only the payment system developed by that company when selling digital goods and services. Last year, Google announced it would mandate Play Store in-app payments, previously applied only to mobile games, for all apps and impose a 30% commission fee. However, with the enactment of the amended Telecommunications Business Act, known as the 'Google Gapjil Prevention Act,' the KFTC is seeking ways to avoid overlapping regulations. Additionally, the KFTC is investigating allegations of 'digital advertising market abuse,' where Google allegedly forced the use of unnecessary services while providing advertising platform services.

Kakao and Coupang also appear unlikely to escape the KFTC's scrutiny. Recently, KFTC Vice Chairman Kim Jae-shin stated, "We have received complaints that major domestic mobility platforms discriminated against non-affiliated taxis and favored affiliated taxis in dispatching, and related investigations are underway." He also pointed out, "There are ongoing issues raised that major online shopping platforms displayed their private brand (PB) products in prominent positions while relegating products from other sellers to lower positions."

The KFTC is also considering prosecutorial referral against Kim Beom-su, Chairman of Kakao's Board, for failing to properly report designated data of the holding company K Cube Holdings. Designated data refers to the status of affiliated companies, relatives, and shareholders submitted annually by the controlling shareholder (head) of a corporate group for KFTC's designation of publicly disclosed business groups. Submitting false or intentionally omitted data can result in fines or criminal charges. The KFTC is also examining possible violations of the 'separation of finance and industry' regulations.

Platforms are expected to be a major topic at the upcoming National Assembly audit next month. An opposition party official said, "As the protection of platform workers and small business owners who are tenants becomes an issue, both ruling and opposition parties are preparing to strongly criticize various problems of platform companies," adding, "There is a high likelihood that negative sentiment toward platform companies will spread."