Google, Which Denied Bundling, Suddenly Shifts to Voluntary Correction: Why? [Why&Next]

Google, facing imminent sanctions from the Korea Fair Trade Commission (KFTC) over 'YouTube Music tying,' has suddenly expressed its intention to apply for a consent decree. This marks a dramatic shift just two months after submitting a statement denying all allegations raised by the KFTC, now acknowledging wrongdoing and opting for voluntary correction and compensation. If the consent decree procedure is initiated, Google can avoid fines, years of costly legal battles, and the legal repercussions of a violation ruling. Amid platform regulations being cited as grounds for mutual tariffs under the Trump administration in the U.S., it is analyzed that Google is calculating to leverage Korea-U.S. trade issues to evade administrative penalties.

According to industry sources on the 16th, Google recently prepared a corrective action plan regarding the YouTube Music tying allegations and is consulting with the KFTC on whether to initiate the consent decree procedure. The KFTC will hold a plenary session to decide whether to accept the consent decree procedure, including the corrective measures to be submitted. If the plenary session approves the initiation of the consent decree procedure, the case will be closed early without determining the legality of the violation. If Google presents a sufficiently reasonable corrective plan, the plenary session could be held as early as next month.

Why the sudden consent decree application just before sanctions?

Google has been bundling YouTube Music, an unpopular product, with its flagship product YouTube Premium, leveraging its market dominance. Users who do not need music streaming services are effectively forced to purchase YouTube Music to avoid ads, engaging in various abuses that block fair market competition with other competing music service providers. The KFTC is currently proceeding with sanctions against Google for these allegations.

Initially, Google submitted a statement to the KFTC in February directly refuting the illegal activities pointed out in the KFTC’s review report. By denying all allegations, Google effectively declared its intention to engage in legal disputes. The KFTC planned to hold a plenary session soon to decide the final level of sanctions against Google, reflecting Google’s statement. However, just before the sanctions were to be imposed, Google suddenly expressed its intention to apply for a consent decree, stating it would voluntarily correct the violations and prepare a cooperative plan for damage relief.

It is analyzed that Google’s sudden move to play the consent decree card is motivated by an intention to use recent Korea-U.S. trade issues as leverage to avoid administrative penalties. When the Trump administration identified regulations on domestic platform companies as one of the non-tariff barriers, the KFTC showed signs of stepping back amid concerns over U.S. backlash and trade friction. Although violations that are serious and clear enough to meet prosecution criteria can be excluded from consent decree eligibility under the Fair Trade Act, the KFTC apparently judged that it is highly likely to accept the consent decree proposal amid increasing U.S. trade pressure.

What might Google’s corrective plan include?

The question is whether the KFTC will accept the consent decree. Some within the KFTC believe that Google should be given a chance for voluntary correction. If sanctions proceed as planned, the case could escalate into administrative litigation, resulting in 3 to 5 years of court battles. Meanwhile, the legal judgment on the problematic conduct would be postponed, and Google’s dominance in the domestic music streaming market could strengthen further. A representative from a major domestic law firm commented, "Considering the dynamic market characteristics of the IT industry, corrective actions taken 3 to 5 years later would be ineffective. Even if the KFTC wins after a long legal battle, Google would only face fines and corrective orders without compensating affected companies and consumers."

For the KFTC to accept the consent decree, Google’s restoration plan for the violations and damage relief measures must be convincing. The violations pointed out by the KFTC include bundling YouTube Music, an unpopular product, with the flagship YouTube Premium based on market dominance and forcing sales, which gave YouTube Music a competitive advantage. Accordingly, Google’s corrective plan is expected to include launching a separate product excluding YouTube Music from YouTube Premium and contributing to a cooperative fund for the domestic music streaming industry. Since Google is applying for a consent decree offering to compensate consumers (businesses) directly instead of paying fines, it is expected to prepare compensation measures commensurate with the level of sanctions.