Unfair Practices

 

Suspicions over Google's unfair business practices and the government's reverse discrimination against local IT companies were mentioned in the ongoing parliamentary audit.

“Owing to the controversy over cyber surveillance and the requirement by Google to feature its apps on Android devices in priority, the local ICT ecosystem is skewed towards overseas companies,” said Rep. Jang Byung-wan from the Science, ICT, Future Planning, Broadcasting, and Communications Committee. In particular, the lawmaker suggested that the Ministry of Science, ICT and Future Planning (MSIP) create a task force to address reverse discrimination in the ICT sector.

Rep. Hong Jong-hak from the Strategy and Finance Committee spoke about the discriminatory application of value-added taxes, one of the most sensitive issues related to reverse discrimination against local IT companies. He remarked, “We are going to revise the tax code to impose value-added taxes on app markets based in other countries starting in 2015, but foreign companies have already encroached on the domestic app market.” Rep. Hong added, “To eliminate reverse discrimination, additional steps must be taken.”

The controversy over Google's unfair business practices was also mentioned. Rep. Shin Dong-woo from the National Policy Committee said, “Google and Apple make up nearly 80 percent of the domestic app market,” adding, “So, we should've examined whether or not they abuse their dominant position in the market in accordance with the Monopoly Regulation and Fair Trade Act.” He pointed out, “Google forces the Google Play Store to be built on Android devices in priority, but refuses to register third-party app markets. I think that Google's behavior violates Article 3 (2) of the Monopoly Regulation and Fair Trade Act.”

According to data submitted by the Korea Fair Trade Commission (FTC), Google constitutes 85.4 percent of the local mobile OS market as of June, comprising around 50 percent of the local app market for the third consecutive year. The company turned over 1.1941 trillion won (US$1.1326 billion) last year.

As lawmakers are criticizing relevant government agencies – the MSIP, the FTC, and the Ministry of Strategy and Finance (MOSF) – the industry is paying attention to whether or not the parliament will investigate foreign companies for unfair business practices.

Rep. Shin said, “As far as I know, Portugal-based Android app store Aptoide filed a complaint with the EU against Google last June for violating anti-trust laws on the grounds that the search engine giant is creating an environment unfair for competition.” He added, “To address this kind of problem, the country’s anti-trust regulator should examine whether or not some of Google's business practices violate the Monopoly Regulation and Fair Trade Act.”

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