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Korea’s FTC may look at Google antitrust practices

Company hit with fine for promoting its own shopping service
July 03,2017
The European Union’s antitrust regulators have fined Google 2.42 billion euros ($2.7 billion), a record amount, for giving an illegal advantage to its own shopping service, and many are waiting for the Korean Fair Trade Commission’s next step.

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 operating system phones with the company’s default search engine, which companies said limited competition, but two years later, the FTC cleared Google.

But the Korean Fair Trade Commission, under the new leadership of former civic activist Kim Sang-jo, now seems to be investigating Google for possible violation of related antitrust regulations using the company’s dominant influence in the market. And it appears that the EU’s decision to fine Google will have a significant impact on the investigation.

“The networks are installed through [Korean] taxpayer’s money, but they are sweeping the information without paying the cost,” Kim said last week in an interview with Yonhap, a local media outlet.

In an interview with the JoongAng Ilbo, Kim said he will monitor global IT firms to find out if there are any violations in collecting big data. Kim added that he will look into whether such firms hamper small companies entering the market.

“It appears that the FTC, which has been passive toward Google, might take a tougher stand after the EU’s decision,” said Lee Hwang, a professor at the Korea University School of Law.

Oh Se-jung, a lawmaker from the opposition People’s Party, also recently proposed a bill to mandate global IT firms like Google and Facebook to release their Korea-based sales and profits data.

But it’s also possible Google will not be targeted in Korea since its market share is quite low compared to other countries. The local portal service provider Naver, for example, holds 75.4 percent of the PC search engine market share as of March, while Google has 6.7 percent.

Meanwhile, the EU regulator recently said Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results and demoting those of competitors.

“From 2008, Google began to implement in European markets a fundamental change in strategy to push its comparison shopping service,” the European Commission said in a press release on Tuesday. Google has a market share in searches of over 90 percent in most European countries.

Google now has to change its search algorithm to avoid further fines. Google has 90 days to do so or face fines of up to 5 percent the average daily worldwide turnover of its parent company, Alphabet.

“Google has come up with many innovative products and services that have made a difference to our lives, but Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals,” said the European Commissioner Margrethe Vestager. “Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.”

“We respectfully disagree with the conclusions announced today,” said Google General Counsel Ken Walker. The company announced it will review the ruling with board members and consider an appeal.

The EU Commission also is investigating Google’s Android operating system and AdSense. “The Commission is concerned that Google has stifled choice and innovation in a range of mobile apps and services by pursuing an overall strategy on mobile devices to protect and expand its dominant position in general internet search,” it said, “And the Commission is concerned that Google has reduced choice by preventing third-party websites from sourcing search ads from Google’s competitors.”

If the commission finds Google violating such regulations, it can fine it 10 percent of its yearly sales.

This is not the first time the European Union has taken tough measures against key U.S. IT companies. The EU commission fined Apple 13 billion euros for not paying taxes in Ireland last year.

Some argue that the EU’s move might bring about conflict with the United States.

In May, the EU Commission fined Facebook 110 million euros for providing incorrect or misleading information during the commission’s 2014 investigation into Facebook’s acquisition of WhatsApp. The commission is also looking into other U.S. companies such as Starbucks, Apple, Amazon and McDonalds.

It appears that the Donald Trump administration is prioritizing “America First” while the European Union is investigating U.S. firms, which some argue is due to bad feeling towards American companies that are monopolizing many sectors in Europe.

Many in Europe are also worried about U.S. companies like Google collecting data on Europeans. Meanwhile, countries like Russia and India are making similar moves. Last year in Russia, where market share of Android phones amounts to 86 percent, Google was fined $6.8 million for installing the company’s basic application to operating systems.

The Indian government also announced that Google manipulated search results in August 2015, and filed a suit against the company. Also, it banned Google Street View services over security concerns.


BY KIM YOUNG-NAM, KIM YOO-KYUNG [kim.youngnam@joongang.co.kr]