South Korea's antitrust authority has concluded that Alphabet Inc.'s Google may have improperly used its power in the Android app ecosystem to limit competition, and it will recommend both corrective measures and a monetary penalty, the regulator said on Wednesday.
The Market Surveillance Bureau of the Korea Fair Trade Commission (KFTC) released an examiner's report finding that the alleged conduct impacted 14.16 trillion won in revenue - roughly $9.1 billion using the rate cited by the bureau - in the Android app marketplace. The report covers conduct from July 2019 through March 2026.
At the center of the inquiry is Google’s Games/Google Velocity Program, which the company internally referred to as "Project Hug." According to the examiner’s report, the program offered financial support to domestic and overseas game developers for adopting or making use of a suite of Google services - including Cloud, Ads and YouTube - on the condition that games were launched on Google’s app store on terms no less favorable than those offered to rival app marketplaces.
The bureau said contract terms within the program were also structured so that the financial support available to developers increased as their revenue through Google Play rose. That escalating support, the report found, created progressively stronger incentives for developers to prioritize Google’s marketplace over alternatives.
As a result, the examiner concluded, the program significantly diminished developers’ incentives to distribute games through competing app stores, including South Korea’s OneStore. The report states this dynamic blocked rivals’ business activities and effectively pushed developers into exclusive-dealing arrangements with Google.
If the full commission ultimately determines that Google abused its market dominance, the KFTC may levy a fine of up to 6% of the relevant affected revenue. Using the examiner’s figure for affected revenue, that ceiling would be based on the reported $9.1 billion figure.
Google will have eight weeks from the date it receives the examiner’s report to provide a written response and to review the evidence. The Market Surveillance Bureau said it will convene the full commission and aim to issue a final decision promptly after Google’s due process rights have been fully observed.
Summary
The KFTC’s Market Surveillance Bureau alleges Google conditioned financial incentives on app store distribution terms that favored Google Play, affecting 14.16 trillion won ($9.1 billion) in revenue and prompting plans for corrective measures and a potential fine.
Key points
- The examiner identified the Games/Google Velocity Program (internally called "Project Hug") as the mechanism tying financial support to Google Play distribution.
- The program’s contracts ramped support as developers generated more revenue through Google Play, increasing incentives to favor Google’s marketplace.
- Sectors impacted include mobile gaming distribution platforms, app marketplace operators, and platform service providers linked to cloud, advertising and video distribution.
Risks and uncertainties
- The final outcome depends on the full KFTC commission’s review and could include remedies and a financial penalty - the report does not indicate a concluded ruling.
- Google has an eight-week window to respond to the examiner’s report, and the bureau will not issue a final decision until the company’s due process rights are observed.
- Any remedies or penalties could affect competitive dynamics among app stores and related service providers, but the timing and scope remain uncertain pending the commission’s final ruling.