Google headquarters [Yonhap News file photo]The Korea Fair Trade Commission (KFTC) has initiated sanction procedures against Google regarding allegations of restricting competition in its app market operations.

While it has been suggested that fines of up to 850 billion won could be imposed following deliberations, Google was previously fined 42.1 billion won three years ago for similar app market transaction-restricting practices.

Google countered by stating that "there were no illegal activities," while the domestic gaming industry welcomed the move, expressing hope for the restoration of fair competition.

Google signs "Most Favored Nation" deals with game companies… KFTC: "Forced monopolistic transactions"

The KFTC secretariat announced on the 1st that it has sent an examiner's report to Google and submitted it to the commission regarding allegations of violating the Monopoly Regulation and Fair Trade Act.

The specific entities under investigation are Google LLC (USA), Google Asia Pacific Pte. Ltd. (Singapore), and Google Korea LLC (South Korea).

The examiner's report is a document containing the facts of illegal activities and recommendations for sanctions identified by the KFTC examiners, equivalent to an indictment in a criminal case.

Once the examiner's report is delivered to the parties involved, the KFTC sanction process begins.

When game companies attempted to leave Google's app market, the Play Store, due to high in-app payment fees (brokerage fees that take a certain percentage of the payment amount when purchasing paid items, etc.), Google entered into so-called GVP (Games/Google Velocity Program) agreements with major domestic and international game companies to prevent them from doing so.

The core of this agreement was that Google would support the cost of using Google platform services such as cloud, Ads (ad purchasing tools), and YouTube, on the condition that game companies set their release timing and quality more favorably—or at least equally—compared to other app markets.

A total of 22 companies signed these agreements, including 5 domestic companies such as Netmarble [251270], NCSoft, Nexon, Com2uS, and Pearl Abyss, and 17 foreign companies such as Activision Blizzard King and Riot Games.

The KFTC explained that while the contract periods vary by company, the overall period spanned from July 2019 to March of this year.

Google imposes 30% fee on all apps and content (PG) [Illustrated by Jang Hyun-kyung]

A notable feature of this agreement is its progressive structure, where support funds increased in proportion to the growth of revenue generated on the Google app market.

KFTC examiners concluded that by using this method, Google significantly reduced the incentive for game companies to enter other app markets.

In particular, the examiners are of the opinion that the progressive structure essentially forced game companies into exclusive dealings with Google.

This obstructed the business activities of competing app markets such as ONE Store. Indeed, the Google Play Store has maintained a market share of over 80% in the domestic Android app market.

Furthermore, the KFTC determined that this also blocked the possibility of some game companies launching their own app markets.

"Although game companies received support funds from Google, it would have been practically difficult to refuse given Google's overwhelming status in the transaction," said Jung Hee-eun, Director of the Market Surveillance Bureau at the KFTC. "Receiving economic support does not necessarily mean game companies are violating the Fair Trade Act."

When asked whether the recent sensitivity of the U.S. toward sanctions involving its own companies was taken into account, he drew a line, saying it was not.

"This is not the first time the KFTC has identified this issue," Director Jung said. "This matter has already been litigated in civil court in the U.S. regarding anti-competitive practices, and a verdict has been finalized."

Possible fines of up to 850 billion won… Google: "No violation of law"

Domestic revenue earned through these abusive practices of market-dominant status is estimated to reach $9.21777 billion (approximately 14.16 trillion won).

The examiners viewed these contracts as a very serious illegal act and proposed corrective orders and the imposition of fines.

The KFTC may impose fines of up to 6% of relevant revenue based on deliberations and applicable laws. This means fines of up to 849.6 billion won could be imposed.

In response, a Google representative stated, "Google has faithfully cooperated with the KFTC's investigation, and we will do our best during the upcoming commission deliberations to clarify that there were no illegal activities."

The representative added, "Google Play competes fairly with other app markets and provides various benefits to developers and users in Korea."

Gaming industry "welcomes"… Sanction procedures again after 3 years

On the other hand, Lee Cheol-woo, head of the Korea Game User Association, which reported Google's headquarters, Singapore subsidiary, and Google Korea to the KFTC in 2024, welcomed the decision, stating, "Google's GVP agreement is a serious illegal act that damaged the gaming ecosystem and pushed losses onto consumers."

"The over 14 trillion won in revenue calculated by the KFTC is effectively money that came out of the pockets of game consumers who had to endure inflated costs due to the monopolistic structure," he pointed out.

Furthermore, the Game User Association announced plans to file a collective dispute mediation application with the Korea Consumer Agency on the same day, urging the refund of illegal in-app payment fees to consumers.

A representative for ONE Store said, "We respect the KFTC's initiation of deliberations and hope that fair competition in the app market will be established."

Previously, in 2023, it was revealed that Google had provided top-tier exposure and support for overseas expansion to game companies on the condition that they did not launch apps on competing platforms like ONE Store, resulting in a 42.1 billion won fine and a corrective order.

As illegal acts have been caught again within five years, the fine could be increased by 20–40% according to relevant regulations.

However, a KFTC official explained, "Even with the increase, the maximum fine remains the same at 849.6 billion won."

Google is guaranteed full defense rights, such as submitting written opinions and requesting the viewing and copying of evidence within 8 weeks from the date of receipt of the examiner's report.

The KFTC plans to reach a final decision quickly, as this is a major issue for restoring substantive competition in the app market.