FTC's Samsung penalty revives questions over regulatory consistency
Summary
The Fair Trade Commission imposed a tentative fine of around 20 billion won on Samsung Electronics in South Korea on Tuesday over allegedly deceptive advertising for its Galaxy devices’ gaming performance. The penalty concerns ads for the Galaxy S21 and S22 series and Galaxy Tab S8 that did not disclose performance restrictions linked to the game optimizing service. The case has drawn questions about the timing of the FTC’s action after consumer claims and related lawsuits were withdrawn, although the regulator can pursue administrative action independently. Samsung disputes the deceptive-advertising finding, while the FTC says its four-year review was needed to verify technical issues.
Key Facts
- The FTC ordered Samsung to stop similar advertising, saying it promoted gaming capabilities without disclosing GOS-related restrictions.
- Samsung released a software update in March 2022 to address user complaints about GOS.
- A lower court dismissed consumers’ damage claims, and the Seoul High Court said Samsung’s advertising was difficult to classify as deceptive in a compulsory mediation decision.
- None of the 1,690 plaintiffs and participating consumers challenged the mediation decision, which became final in March.
- FTC Chairman Ju Biung-ghi said fines for obstructing investigations should reach around one percent of a company’s sales.
Antitrust watchdog's belated Samsung sanction risks undermining regulatory credibility: expert
Samsung Electronics' Galaxy S21 flagship smartphone series / Courtesy of Samsung Electronics
The Fair Trade Commission's (FTC) latest sanction against Samsung Electronics is reviving questions over the consistency of its enforcement, as controversy persists over the timing and validity of the penalty.
The dispute came shortly after the antitrust watchdog imposed a tentative fine of around 20 billion won ($15 million) on Samsung, Tuesday, for allegedly deceptive advertising related to its smart devices’ game optimizing service (GOS), which regulates processor performance to control heat and battery consumption during demanding gaming sessions.
The regulator ordered Samsung to stop similar advertising, saying the company promoted the gaming capabilities of its flagship Galaxy S21 and S22 smartphone series and Galaxy Tab S8 tablets without disclosing GOS-related performance restrictions.
The controversy dates back to 2022, when users accused Samsung of overstating gaming performance while restricting device capabilities through GOS. The company released a software update in March that year to address the complaints.
The move, however, has raised doubts, as it came after the controversy appeared to have been resolved through software updates and the withdrawal of legal complaints. Industry and legal observers have questioned why the FTC reopened the matter years after the original dispute, particularly when no court has ruled Samsung legally liable for the alleged misconduct.
Choi June-sun, professor emeritus at Sungkyunkwan University Law School, said it is “highly unusual” for such a case to take four years to complete legal reviews.
“Even cases involving complex technical issues and legal reviews typically take around three years to reach the Supreme Court these days,” Choi explained.
“Companies would understandably be taken aback and question whether this case warranted such a lengthy process. Pursuing the case this late could undermine companies’ trust in the policy authorities.”
Last year, a lower court dismissed consumers’ damage claims, finding insufficient grounds to conclude that they had suffered losses.
The Seoul High Court also issued a compulsory mediation decision, saying Samsung’s advertising was difficult to classify as deceptive. The court noted that device performance depends on multiple factors, including heat management, battery life and frame rates rather than processor clock speeds alone.
Fair Trade Commission Chairman Ju Biung-ghi speaks during an annual audit at the National Assembly in Seoul, Oct. 21. Yonhap
None of the 1,690 plaintiffs and participating consumers challenged the mediation decision, which became final in March. The complainants subsequently withdrew their FTC complaints, while lawsuits in the United States and Israel also ended through withdrawals.
However, such developments do not legally prevent the FTC from pursuing administrative action. The regulator can independently determine whether advertising misled consumers, regardless of whether individual buyers established grounds for compensation.
Samsung argues GOS is an optimization feature designed to improve users’ gaming experience, so the company cannot accept the decision to classify its advertising as deceptive on the grounds that it did not disclose the specific details of how the optimization feature operates.
Samsung’s legal representative, Jipyong LLC, argued that the software was designed to maintain smooth gameplay in a limited number of titles that generated excessive heat, making it difficult to characterize the feature as inherently deceptive.
An FTC official, however, defended the lengthy process, saying the case required years of review to be thorough.
“Although the incident occurred in 2022, it took us four years to verify the technical issues and establish grounds for imposing a fine on Samsung Electronics for deceptive advertising,” the official said.
The penalty also comes amid mounting scrutiny of the FTC’s tougher enforcement stance toward major companies, including Coupang and Hanwha. The regulator is showing clear signs of expanding its punitive approach to the nation's business circle, backed President Lee Jae Myung's strong regulatory stance.
FTC Chairman Ju Biung-ghi recently said that fines for obstructing investigations should reach around one percent of a company's sales to improve enforcement effectiveness.
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