Google — already facing heat from accusations that it is exerting more control over its Android platform and blocking competition in some cases — is dealing with new antitrust complaints in South Korea over its mobile operating system. Two internet companies have filed complaints with Korea’s Fair Trade Commission, claiming that Google is blocking operators and manufacturers from pre-installing their search engines on phones, according to Bloomberg.
Rivals Daum Communications Corp and NHN Corp, which operates South Korea’s biggest search engine Naver, are calling on regulators to investigate Google for anti-competitive practices. Android phones in Korea offer Google search by default. Users can download specific search applications but according to the complaint, Google has reportedly prohibited other companies from pre-installing their search products on the phones. That has helped boost Google’s share of the mobile searches from 2 percent to 15 percent, according to NHN.
The complaints bring new scrutiny to Google, which is facing antitrust concerns in the U.S. and Europe. A Google spokesperson in South Korea said the company is looking at working with the Korean FTC to answer its questions. “Android is an open platform, and carriers and partners are free to decide which applications and services to include,” Lois Kim, a Seoul-based spokeswoman for Google told Bloomberg. I’ve reached out to Google for further comment.
The latest complaint comes not long after a recent Businessweek story reported that Google attempted to hold up the launch of some Verizon Android phones that came pre-installed with Microsoft’s Bing search engine. That report laid out growing concern from a number of industry players, who said Google was exerting more control over its open operating system, something Google’s senior vice president Andy Rubin disputed in a blog post.
The South Korean complaint also comes in the wake of a lawsuit by location provider Skyhook Wireless, which has accused Google of preventing Motorola and another manufacturer from using its technology in favor of Google’s location technology. The U.S. Fair Trade Commission is also reportedly considering launching an investigation into Google’s competitive practices. Microsoft has also filed a complaint with the European Commission against Google for its search practices.
It’s unclear if the South Korean allegations are true. But they speak to Google’s main business model with Android, which it distributes freely to carriers and manufacturers. Google’s business is predicated on seeding the market with more Internet capable devices that will spur on Google searches, which allow Google to bring in revenue from search ads. If Google is unable to be the default search provider on phones, it cuts into its potential revenue stream.
Google chairman Eric Schmidt has said Android could be a $ 10 billion business if a billion users generated $ 10 per year for Google. There are signs that Google is already on its way to getting that average revenue per user through Android, but if manufacturers and carriers strike their own deals and go with other default search providers, it may slow Google’s attempts to monetize through Android.
Google has already said Android is on pace to be a $ 1 billion business. But it’s got the potential to be a lot more as sales go through the roof. With so much at stake, the question is how far will Google go to extract the most revenue out of its new money-maker. Nothing has been proven yet but as the complaints mount, the question becomes more pointed for Google.
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