Blog

Geoffrey A. Manne (Executive Director of the International Center for Law and Economics)*

Android is one of the world’s most successful open platforms. It has undeniably engendered a remarkable level of economic growth and creativity in the mobile economy — particularly in South Korea. From providing consumers with greater choice and lower prices to facilitating unprecedented innovation by app developers and device makers, Android’s operating system is at the center of the mobile revolution^[1] — and it is no exaggeration to say that Android has placed South Korea squarely at the forefront of the global mobile economy.

So why is Android the focus of renewed antitrust attention and complaints that Google’s business practices around the mobile OS are harming competition in Korea?

In 2011, in response to similar complaints from two Korean search giants, Naver and Daum, the Korea Fair Trade Commission (KFTC) engaged in a thorough investigation into Google’s Android-related business practices. The investigation ended in 2013 with the KFTC rejecting all of the allegations against the company.

But in light of the European Commission’s recent Statement of Objections alleging harms to competition in Europe, there have been calls in major media publications for the KFTC to carry out exactly the same investigation again, even though competitive conditions haven’t changed since the last investigation.

The KFTC should once again reject these calls for regulation that benefits competitors rather than consumers, and remain one of the vast majority of world antitrust regulators^[2] that have found no basis to bring a challenge against Google.

The European Commission’s complaints against the company are fundamentally based on the theory that Google’s aim is to “preserve and strengthen its dominance in general internet search.” But it can hardly be said that bundling Google Search with Android serves to “preserve” Google’s dominant search position in Korea. For one thing, despite some recent gains, Google’s search market share^[3] has long been negligible compared to its primary domestic competitors, and Android has done little to dent their dominance. And if the practice is meant to lift Google up from its relatively weak position in search, it has been decidedly unsuccessful thus far.

Google simply doesn’t have the ability (nor the inclination) to harm consumers or competition in Korea in the manner alleged by the European Commission.

In Korea, Google, with its branded Android operating system, remains a significant but — importantly — non-dominant player. While some Android devices install Google services, many others do not.^[4] Nor do Google’s practices lock device manufacturers into Android at all, as Samsung’s burgeoning Tizen operating system ecosystem demonstrates.

The KFTC looked at these facts in 2013 and concluded that Google had not engaged in behavior to harm competition. If anything, the economic conditions supporting that conclusion have only gotten stronger since.

Today manufacturers are deploying Android to power phone and tablets but also watches and TVs. Developers are building an ever-widening array of apps and software for this ecosystem, bolstered by the cross-device interoperability that Android affords. In fact, among the apps being sold in Google’s (global) Android app store, South Korea boasts the fifth highest number of developers.^[5]

Meanwhile, the average South Korean smartphone user downloads 40 apps,^[6] more than in any other country — nearly all of them free. Whatever else may be said about the bundling of Google Play with Android, it can’t be seriously argued that it has harmed the ability of South Koreans to access the apps of their choice, including apps made by Google’s Korean search competitors, several of which are among the app store’s top downloads.^[7] 

One has only to look at Korea’s vibrant^[8] and informed^[9] mobile marketplace to see there is no evidence to suggest that Google has harmed app developers’ incentives to innovate, either. Korean mobile app companies are thriving. Color-Note, a Korean mobile media business, has exhibited remarkable growth. And KakaoTalk,^[10] a Korean messaging platform, not only minted a billionaire, but was one of the companies at the forefront of integrating messaging platforms with a wide range of other apps — a technological development now being wielded by Facebook’s Messenger app to challenge the supremacy of app stores^[11] like Google’s.

Consumers in South Korea are among the most savvy tech adopters in the world. The country’s embrace of the Android platform has served to encourage immense innovation, and developers, device manufacturers, consumers and competitors have all benefitted as a result. 

Korea should not blindly follow Europe when it comes to internet regulation. The KFTC has already conducted an investigation into Google’s practices in the country and found no evidence of harm to competition. Korea has a thriving digital ecosystem and is a global leader precisely because regulators have focused on supporting Korean innovation. They should continue on that path to continued economic success.

Jung-Haeng Lee (Co-Founder and Developer, VCNC)*

I am an Android developer. I developed an Android-based social networking service called “Between”  in 2011, which became a very popular service in Japan, Singapore, Taiwan and Thailand, etc. I, as a developer who has grown with the expansion of application market, feel frustrated with the recent discussion about Android monopoly.

Last month, the European Commission made headlines in many media with its antitrust charges against Google. Google was also brought to a similar inquiry by the Fair Trade Commission of Korea in 2013, which was later cleared by the commission. The news from Europe has triggered voices advocating re-investigation in Korea, but this needs a cautious approach.

Declared open source for everyone, Android has continued rapid growth by attracting a number of manufacturers and telecommunication service providers to its ecosystem, and now it is the mobile platform with the most number of users. Android’s open policy served as a stepping stone for manufacturers to enter the smartphone market faster with lower costs, and telecommunication service providers have taken advantage of Android to offer mobile internet services to many users. Such openness has served as a driving power for Android to grow as a global mobile platform. On the other hand, fragmentation is a serious problem for developers. Open platforms like Android are prone to fragmentation, or the proliferation of several incompatible versions of the same operating system. Google has made huge strides to solve some of the jarring fragmentation issues facing developers since 2011 and the pain from the fragmentation has been actually relieved. It is irony and even sympathetic, though, that the efforts with a good intent has brought Android antitrust issue to Google. I’d like to elaborate what it means to Android developers, including myself.  Let’s take a closer look at the fragmentation issue here.

Fragmentation: A headache for users and the ecosystem

If Android apps do not run the same way on different Android devices and cause various problems, it does not only mean a headache to the developers and manufacturers: Users themselves also face the challenge of checking if an app runs smoothly on their devices. Fragmentation was an issue in Android’s early days. Developers used to spend a lot of efforts to test their apps on various Android devices, sacrificing precious time to develop functions that really matter. Fragmentation hindered them from developing better Android apps.

This would not only pose challenges to developers. With continued fragmentation, Android app developers would not be able to test their apps for all Android devices, hence give up on minor devices with a smaller number of users. This would in turn encourage users to choose popular devices that run well with many Android apps, ultimately leading to only few, widely-used survivors in the market. Smaller Android device manufacturers would be in trouble, and technical innovation through competition among various devices would be hindered. This would not only interfere with manufacturers but also obstruct users’ freedom of choice.

In addition, if users keep experiencing troubles in using Android apps on their devices, they would end up choosing another, non-Android platform. If this continues, it would result in overall decreases in the number of Android users and developers will have less incentive to develop Android apps. Reduced market size for Android would damage Google, as well as all developers, manufacturers, and telecommunication service providers involved in the Android ecosystem. As such, fragmentation is a serious problem that may significantly impact the entire Android ecosystem.

Anti-fragmentation agreements: a god-send for developers

One of the efforts Google has made to resolve the fragmentation issue has been to give  manufacturers the choice to adopt the anti-fragmentation agreement (AFA) and the compatibility definition document (CDD). They serve as guidelines for manufacturers to apply Android to their devices, thereby making stable devices that would allow Android developers to develop apps without facing the fragmentation issue. Thanks to years of efforts, Android has made its ecosystem, which used to experience serious fragmentation, more stable

Google’s such actions have raised antitrust issues, claiming that Google uses the AFA to force manufacturers to preload its apps in Android devices, which would constitute abuse of the market-dominant position of Android. But even signing the AFA, Google allows manufacturers to simultaneously preload other apps that have the same functions. In addition, users are allowed to substitute for Google apps by downloading other basic apps by themselves.

Android enhances consumer choice through allowing multiple app stores

Questions around Android’s app store, Google Play, are also worth addressing here. To developers, having only one big app store covering the whole world is more beneficial, as they would be able to sell to Android users worldwide rather than only to Korean customers. A big app store like Google Play Store is needed for the Android ecosystem. But this does not necessarily mean that Google is blocking other markets. Google allows other businesses to run Android app stores. Devices marketed through telecommunication service providers have their own Android markets, and ones sold by Samsung contain Samsung’s own Android market app. In other devices, Android market apps can be downloaded on the web. Considering various aspects, many developers often use other companies’ Android app stores rather than Google Play  iStore.

In this way, Google has been striving to resolve the fragmentation issue and at the same time to keep Android’s distinctive openness. Google’s endeavors geared towards resolving fragmentation should be seen from a separate viewpoint from antitrust. Android’s antitrust issue should be approached in consideration of many aspects. A wrong choice may greatly affect the Android ecosystem. It requires a prudent decision that comprehensively considers the opinions of all interested parties in the Android ecosystem including developers, telecommunication service providers, and manufacturers.

*VCNC develops Between, a social network service for couples and other applications.