S.Korea fines Google $177 million for blocking Android customization

SEOUL - A South Korea's antitrust regulator has fined Alphabet Inc's Google 207 billion won ($176.64 million) for blocking customized versions of its Android operating system (OS), in the U.S. technology giant's second setback in less than a month.

The Korea Fair Trade Commission (KFTC) on Tuesday said terms with device makers amounted to abuse of Google's dominant market position that restricted competition in the mobile OS market.

Google in a statement said it intends to appeal. It said the ruling ignores benefits offered by Android's compatibility with other programs and undermines advantages enjoyed by consumers.

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The fine comes on the day an amendment to South Korea's Telecommunications Business Act - popularly dubbed the "anti-Google law" - came into effect.

The law now bans app store operators such as Google from requiring software developers use their payment systems - a requirement which effectively stopped developers from charging commission on in-app purchases.

KFTC said Google hampered competition by making device producers abide by an "anti-fragmentation agreement (AFA)" when signing key contracts with it regarding app store licenses.

Under the AFA, manufacturers could not equip their handsets with modified versions of Android, known as "Android forks." That has helped Google cement its market dominance in the mobile OS market, the KFTC said.

The regulator said the fine could be the ninth-biggest it has ever imposed.

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In 2013, Samsung Electronics Co Ltd launched a smartwatch with a customized OS, but switched to a different OS after Google regarded the move as an AFA violation, KFTC said.

Samsung Electronics declined to comment.