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FTC reviews Google and Facebook’s market dominance

June 26,2017
The Korean Fair Trade Commission, under the new leadership of former civic activist Kim Sang-jo, seems to be targeting major global IT companies - Google and Facebook - in regard to collecting information that are considered key elements of the so-called fourth industrial revolution technologies.

In his interview with Yonhap, Kim said the antitrust agency is “reviewing” whether there has been any monopolizing of information or violation of related antitrust regulations using the companies’ dominant influence in the market.

“The networks are installed through [Korean] taxpayer’s money but they are sweeping the information without paying the cost,” Kim told Yonhap.

The FTC Chairman said in the case of fourth industrial revolution technologies - big data, cloud storage system, Internet-of-Things and artificial intelligence - network effects, where demands for certain goods and services increase with more people using them, play a pivotal role.

As a result, he said, once companies take the lead, late comers have difficulty in entering the market, which deters fair competition.

Kim said it is the FTC’s role not only to reform the conglomerate-reliant economic structure, but also to create the basic market structure for new future industries. This is not the first time that Google has been investigated by the Korean antitrust agency.

In 2011, Google was investigated by the FTC after the two biggest Korean web portal companies, Naver and Daum, accused the U.S. IT company of pre-loading its Android OS phones with the company’s default search engine, a move that the companies said limited competition. Two years later, the FTC cleared Google. But a year ago, the investigation was reopened after the Korean antitrust agency said new evidence emerged.

Former FTC Chairman Chung Jae-chan earlier this year confirmed the investigation, saying Google is accused of preventing Samsung Electronics from developing its own OS system. The same contract that Samsung has signed was reportedly applied to other smartphone manufacturer, including LG Electronics.

As of March, Google’s Android OS system holds the biggest market share on the Korean smartphone operating system market at 80 percent. Apple’s iOS, which is the runner up, only accounts for 19.7 percent.

While the OS investigation is still ongoing, the new Korean antitrust agency chief seems to be concentrating more on the fourth industrial revolution technologies, particularly big data.

The application of big data is expected to play a crucial role in new technologies and markets. The Moon Jae-in administration has emphasized the development of the fourth industrial revolution and its technologies as the country’s new growth engine.

In fact, a special committee on the fourth industrial revolution that will be led by an expert from the private sector is scheduled to be launched in August. The committee is expected to collect and fine tune different government policies on the new technologies to enhance efficiency and effectiveness.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]