South Korea’s antitrust regulator fined Google $177 million

September 15, 2012: On Tuesday, South Korea’s competition regulator announced it would fine Google 207.4 billion Korean won for using its dominant market position allegedly in the mobile operating system space to stifle competition.

Google’s Android operating system currently holds the lion’s share of the smartphone market, ahead of Apple’s iOS platform.

According to the Korea Fairtrade commission, the U.S. tech giant allegedly used its market position to block smartphone makers like Samsung from using the operating systems developed by rivals.

Yonhap News further said that the regulator, which published its decision in Korean, said the tech giant required smartphone makers to accept an “anti-fragmentation agreement” when signing key contracts with Google over the app store licenses and early access to the operating system.

That agreement prevented device makers from installing modified Android operating system versions, familiar as “Android forks,” on their handsets, Yonhap reported.

The regulator alleged that practice stifled innovation of Google in developing new operating systems for smartphones, the news site added. According to Yonhap, the KFTC has asked the tech giant to stop forcing companies to sign AFAs and ordered it to take corrective steps.

A Google spokesperson argued that Android’s compatibility program has spurred hardware and software innovation and brought success to Korean phone makers and developers.

“The KFTC’s decision released is ignoring these benefits and will undermine the advantages enjoyed by consumers. Google intends to appeal the KFTC’s decision,” the spokesperson told CNBC.

The fine is tiny compared with the tech giant’s quarterly figures. Last quarter, Google’s parent company Alphabet reported $61.88 billion in revenue.

Still, the decision of Tuesday is the latest setback for the tech company in South Korea.

In late August, the parliament approved a bill that will permit app developers to avoid paying hefty commissions to major app store operators, which include Google, by directing users to pay through alternate platforms.