Google is under investigation for its tie-in sales of YouTube Premium and YouTube Music services. According to the Korea Fair Trade Commission (KFTC), KFTC is inquiring whether Google’s policy to restrict the purchase of YouTube Premium service without YouTube Music is against the Enforcement Decree of the Monopoly Regulation and Fair Trade Act.
After the launch on Nov. 12, 2015, YouTube Music started its services in Korea in February 2020. At the time, YouTube was a latecomer to the music streaming market of Korea, since domestic music streaming services, such as Melon, were holding a large user base. Despite this setback, YouTube has grown its user base quickly and now has become a music platform with the biggest user base in Korea, four years after its arrival. There has been speculation, however, that the rapid growth of YouTube Music in Korea is partly due to its tie-in sale policy. Conversely to its policy in most countries, Google Korea has only offered YouTube Premium service as a bundle with YouTube Music membership. Since YouTube is one of the biggest media platforms in Korea, offering YouTube music services along with YouTube premium services drives many platform users to join YouTube music as well. These users then do not have to subscribe to other music platforms, which in turn disfavors platforms other than YouTube Music.
The Korean government prohibits the abuse of market-dominant positions according to the Enforcement Decree of the Monopoly Regulation and Fair Trade Act. Google Korea’s policy could be interpreted as an abuse of its market-dominant position in the media platform market, which helped its music service to take over the music streaming market, and thereby could be seen as a violation of such legislation. KFTC also explains that this investigation was undertaken in order to broaden consumers’ choices that they deserve, which would enable consumers to purchase a YouTube Premium service alone.
The issue of ongoing investigation, however, is not the only criticism Google Korea is facing. Park Choong-kwon, a Korean politician and a member of the National Assembly of Korea, revealed the discriminatory aspect of Google Korea’s policies, compared to its policies in other countries. According to Park, Google has offered diverse options for its premium services in other nations, while only offering one standardized service in Korea. The options available overseas include student and family plans, and YouTube Premium, which are relatively more affordable. He also adds that in 2023, Google raised the subscription fee by 43% of its original price in Korea, while raising the fee by only 10-20% percent in other countries. He explains that Google has discriminated against its users in Korea by limiting the options for YouTube membership.
The KFTC’s investigation became highly controversial among many platform users in Korea. Some users agree with KFTC in that the policy is highly discriminatory, while others show skepticism about the regulation. Some interpret the integration of YouTube Music and YouTube Premium service as not a tie-in sale, but rather as YouTube Music being offered to YouTube Premium users. They suspect that the separation of the two services would not be cost-effective but rather cost more, since they would have to subscribe to both services to utilize the current services.
There has also been an interpretation that other large corporations in Korea, even domestic ones, might be regarded to have violated fair trade law, if the Fair Trade Commission labels YouTube’s policy as a tie-in sale. Coupang, for example, has been offering membership of CoupangEats and CoupangPlay to the users who have subscribed to its CoupangWow membership. Coupang, like YouTube, has a market-dominant position in its market, and offering its subscribers to use CoupangEats and CoupangPlay could be also interpreted as an impediment to other companies if YouTube is to other streaming platforms. In fact, other delivery companies, including Naver Shopping, have also been offering additional services like OTT subscriptions to their membership users.
While it appears evident that Google Korea has implemented somewhat discriminatory policies in various aspects, there is still ongoing controversy regarding whether and to what extent regulation is necessary for the issues of the current investigation. It remains an important challenge for KFTC to come up with a solution and criteria for tie-in sales that most public would agree with.
