Seoul Says Google's 'Project Hug' Locked Game Developers Into Play Store

SEOUL, July 1 (Reuters) - South Korea's antitrust regulator alleged on Wednesday that Alphabet's Google abused its dominant position in the Android app marketplace to hinder competition and will recommend corrective measures and a financial penalty. 

The Korea Fair Trade Commission's (KFTC) Market Surveillance Bureau found Google's alleged abuse of market dominance in the Android app marketplace affected 14.16 trillion won ($9.1 billion) in revenue, the bureau said in a media briefing where it released its examiner's report on the matter.  

From July 2019 to March 2026, Google's Games/Google Velocity Program, which it internally called "Project Hug", offered domestic and overseas game developers financial support for using Google services such as Cloud, Ads and YouTube, provided that they launched games on Google's app store on terms at least as favourable as rival app marketplaces, the report said.

The contracts were also structured so that Google's financial support increased progressively as developers generated more revenue through Google Play, creating stronger incentives to prioritise Google's marketplace.

The programme significantly reduced developers' incentives to distribute games through competing app stores, including South Korea's OneStore, blocking rivals' business activities and forcing developers into de facto exclusive dealing with Google, according to the report.

If the commission ultimately concludes that Google abused its market dominance, it may impose a fine of up to 6% of the relevant affected revenue of $9.1 billion.

Google has eight weeks from receiving the examiner's report to submit a written response and review the evidence. The bureau said it plans to convene the full commission and issue a final ruling promptly once Google's due process rights have been fully observed.

($1 = 1,556.4400 won)

(Reporting by Heekyong Yang; Editing by Christian Schmollinger)