Concern over Monopoly
An increasing number of people are voicing their opinions that the main reason for Google's monopoly in the local ICT industry is the government's reverse discrimination against local companies, calling for an urgent improvement of the system.
On Sept. 18, Rep. Jang Byung-wan from the Science, ICT, Future Planning, Broadcasting, and Communications Committee held a forum aimed at finding solutions for Google's domination and reverse discrimination against local companies in the ICT industry. Experts who attended the event pointed out that the requirement by Google to feature its apps on Android devices in priority and the discriminatory application of value-added taxes are reversely discriminating local companies.
Hwang Tae-hee, a professor at Sungshin University explained, “Google accounts for 53 percent of the global mobile operating system (OS) market, but its share of the local market amounts to 90 percent.” He added, “This difference is attributable to the government's regulations that discriminate against local companies.”
The professor also pointed out, “Based on Android's market dominance, Google is engaged in unfair business practices that are detrimental to consumer choices and interests. For example, the company forces its apps to be built on Android devices in priority, refuses to register third-party app markets, and charges high fees for apps on the Google Play Store.”
When asked why apps that are previously-built on mobile devices are popular, he responded by saying, “Among the top 10 apps, 6 out of 7 previously-built apps are Google apps.” He added, “The phenomenon is due to the fact that Google virtually bundles its apps into the Android system to exert leverage over the app market through its dominance in the mobile OS platform.”
Professor Hwang also remarked, “Under the government's guidelines for advance installation of apps on mobile devices, the Google Play Store, which is Google's app market, should be classified as a non-essential app that can be deleted by users. But it is regarded as an essential app instead.” He continued by saying, “This will discriminate against local business operators.”
Last January, the Ministry of Science, ICT and Future Planning announced guidelines for the pre-installation of apps on smartphones. According to the guidelines, apps needed for delivering features or technologies of hardware or for installing or running an OS are classified as essential apps, and other kinds of apps as non-essential. Those guidelines were made to give users a right to delete non-essential apps.
During the discussion, the issue that Google does not let third-party app markets register on the Google Play Store was pointed out as a representative unfair business practice.
An official at SK Planet stressed, “There are a lot of cases in which companies get around regulations when their servers are located overseas. So, the problem is that regulations do not apply to all in a fair manner.” The official added, “Local companies are called a market dominator subject to regulations when their market share is more than 50 percent. However, foreign companies like Google are not regulated by the law, even though Google dominates the market with more than 80 percent share.”
Meanwhile, Park Jong-soo, a professor from Korea University, noted, “There is growing controversy over the legal jurisdiction over imposing value-added taxes, since there is a distinct difference between local and foreign companies in applying value-added taxes. So, we need to consider specifying the jurisdiction in a law.
“Article 2 (2) of the Monopoly Regulation and Fair Trade Act, which should control unfair business practices and could be applied to Google, remain as declaratory provisions,” said the professor. He added, “Provisions that can regulate anti-trust should be added to related laws like the Monopoly Regulation and Fair Trade Act and the Telecommunications Business Act.”
Major foreign countries such as the E.U. are actively seeking to eliminate reverse discrimination and to have regulations apply to all companies in a fair way in order to stop Google's unjust moves through its monopoly of its mobile OS.
In particular, professor Park stressed, “In the case of the platform area, which is emerging as the largest promising industry in the future, including big data, it is necessary to create regulations that consider fairness from the beginning.”
Rep. Jang pointed out, “The mobile market is worth merely 3 trillion won [US$2.8 billion]. But, in fact, it is directly connected with the market dominance of the ICT industry, which is estimated at 400 trillion won [US$384 billion] per year. The legislator added, “Currently, local companies are harmed by the government's reverse discrimination in the mobile market, which will ultimately decide the success or failure of the ICT industry. I think that is utterly absurd.”