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Google is facing an anti-trust investigation by the Fair Trade Commission (FTC) for allegedly forcing Korean smartphone manufacturers and carriers to preload its search engine at the exclusion of others.
The complaint comes at a time when competition for the growing mobile phone advertising market is getting fiercer. Still, it remains to be seen whether this complaint will turn into anything like the one against Microsoft, which was investigated for bundling practices involving its media player and messenger service.
NHN, the operator of Korea’s biggest portal Naver, and the second largest Daum filed complaints, Friday, arguing that Google exploited its position as the developer of the Android mobile operating system (OS), stifling competition.
Upon receiving a complaint, the antitrust watchdog makes it a rule to check even just to see if it makes any sense before undertaking a full investigation.
About 10 million smartphones are in use in Korea, with 66 percent of them running on the Android platform as of last year, up from 4 percent the previous year.
The fast growth stems mainly from Google’s policy of allowing the free use of its platform. Samsung, LG and Pantech chose the free operating system.
An Android phone user has to download applications, if they want to use Daum, Naver or any other search engine besides that which it comes with.
“While making various efforts to make Daum a preloaded search service, we found that Daum is being excluded due to Google’s practices. We reported this to the Fair Trade Commission,” a Daum official said. “Google says that mobile carriers and manufacturers preloaded only Google as their choice, but anybody can see that it doesn’t make sense when considering that Google has only 1 to 2 percent of the local market share in wired search services,” he added.
Daum stressed that excluding competitors in the rapidly growing mobile search service constitutes serious unfair trade. It deprives competitors of the opportunity for fair competition, incurs economic damages, and infringes on consumers’ rights to choose their search service independently.
NHN, the operator of the country’s top portal Naver, said that when Google signed a carrier billing service contract with a local mobile carrier, it forced the carrier to exclude other search services from being preloaded. Carrier billing service enables mobile users to include billing for applications they bought at the Android market in the billing from their mobile carriers.
Google also sought to ban smartphone manufacturers from preloading search widgets of its competitors when it signed a marketing alliance contract with handset manufacturers. If they violated this, Google purposely delayed a compatibility test that smartphone manufacturers are obliged to go through before releasing Android phones, according to NHN.
“We acknowledge that Google set up a new ecosystem by making Android, a mobile operating system, and distributing it for free, but it isn’t fair to use that operating system as a tool to hinder market competition,” an NHN official said.
Google Korea says that manufacturers decide which search service to provide on their handsets. “Android is an open source, open to anybody, and both carriers and OEM partners are free to decide which applications and services to include on their Android devices,” a Google Korea official said.
She said whichever search service manufacturers choose to install is their business decision.
“We will cooperate with the FTC to address any questions they may have,” she added.
Rep. Jeong Tae-keun of the governing Grand National Party, however, suspected the pressure is exerted in a more deceptive way. “Google says manufacturers are left to choose but that is the case only with low-level operating systems. If manufacturers are to use higher level operating systems, which are necessary for the smooth function of smartphones, they must install Google,” a secretary for the lawmaker said.
He added that though users can download Naver or Daum later, it would be too much of a nuisance for people not familiar with the technologies. They will just use Google, as the default service.
Google Korea, however, said that is nonsense. The Google official pointed out that some Android phones in the United States have Bing and some in China have Baidu as default search services. “The only thing we do on those phones is an Android compatibility test. That’s all,” she said.
Apple’s iPhone has Google and Yahoo installed as default, but the Daum official said they aren’t considering making it an issue for now. They are taking only Google as the problem.
The decision reflects local portals seeing Google as a threat. Google is the top search service in most countries, but Korea has been an exception. Naver takes up around 70 percent of the market and Daum takes up around 20 percent as of January. Google, meanwhile, is insignificant, taking less than 2 percent of the Web search engine market here.
When it comes to mobile phones, however, it is a different story. Google’s share in the mobile world rises to around 16 percent. Local portals say that the rise stems from the fact that Google is set as the default search engine in smartphones.
Google, which had the initiative in mobile communications, is now reaping the benefits. Local portals have been making money from display advertisements and keyword advertisements on the Web, but the model is nearing saturation due to a shift from desktop to smart devices. AdMob, Google’s mobile advertisement platform, meanwhile, saw traffic grow by over 5,000 percent here last year. Daum set up Ad@m, a mobile advertisement agency, and both Naver and Daum are making money from mobile keyword advertisement, but Google is in an advantageous position.
It is considered doubtful that Daum and Naver will win their suits — the secretary for Kwon said that Google was acquitted in a similar case abroad.
The antitrust body here levied a 33 billion won fine on Microsoft for including its Media Player and MSN Messenger services in its Windows operating system. In the case of Google, however, manufacturers and carriers choose to install Google, whether they are pressured or not. Moreover, some smartphones have other search engines installed as well. LG Electronics’ Optimus Q, for example, had Naver set as the default search service.
구글 스마트폰 ‘묶어팔기’ 관행으로 반독점행위 조사 받게 돼
구글은 한국 스마트폰 제조업체와 통신사들에게 자사의 검색서비스를 배타적으로 선탑재하도록 강요한 혐의로 공정거래위원회의 조사를 받을 예정이다.
이러한 불만은 점점 커지고 있는 모바일 광고 시장에서의 경쟁이 치열해지고 있는 가운데 나온 것이다. 하지만, 이러한 불만이 미디어플레이어와 메신저 서비스를 묶어파는 관행으로 조사를 받은 마이크로소프트사에 내려진 조치와 같은 결과를 낳을지는 지켜볼 일이다.
한국의 최대 포털 네이버의 운영사인 NHN과 2위 업체 다음은, 구글이 안드로이드 모바일 운영체제의 개발사로서의 지위를 남용해 경쟁을 막았다며 금요일 고발을 접수했다.
한국에서 스마트폰 사용자는 1천만명 가량 되는데, 작년 기준으로 66퍼센트가 안드로이드에 기반해 운영된다. 이는 전년의 4퍼센트에서 상승한 것이다.
이러한 빠른 성장은 자사의 플랫폼을 무료로 사용케 해주는 구글의 정책에서 기인한 면이 많다. 삼성, LG와 팬텍이 이 무료 운영체제를 선택했다.
안드로이드폰 사용자는 여기에 이미 탑재된 검색서비스 이외 다음, 네이버 등의 서비스를 사용하려면 앱을 다운로드받아야 한다.
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