KFTC Alleges Google Abused Android App Dominance via Project Hug

South Korea’s KFTC alleged on Wednesday that Google abused its dominant position in the Android app marketplace through a program that paid game developers to favor Google Play over rival stores. The regulator’s Market Surveillance Bureau released its examiner’s report on the conduct, identified internally at Google as Project Hug, a campaign the bureau said ran from July 2019 to March 2026. The framework allows a fine of up to 6% of the 14.16 trillion won ($9.1 billion) the regulator puts on the table as affected revenue.

The bureau’s findings frame the program as a sustained scheme that “significantly reduced” developers’ incentives to distribute games through competing stores and pushed them into de facto exclusive dealing with Google. The bureau is recommending corrective measures alongside any financial penalty.

The Examiner’s Findings

The Market Surveillance Bureau laid out its case at a press briefing in Seoul on July 1, Reuters reported. The bureau set the “relevant affected revenue” at 14.16 trillion won ($9.1 billion), the figure that will set the ceiling for any future fine if the full commission upholds the abuse finding. The exchange rate used by Reuters was $1 to 1,556.44 won.

The examiner’s report treats Google’s conduct from July 2019 to March 2026 as one integrated campaign rather than a series of independent commercial deals. Inside Google, the program carried the name “Project Hug.” Outside, it was branded the Games/Google Velocity Program. A multi-year scheme with explicit exclusivity clauses is a harder case for Google to defend as ordinary competitive behavior than a string of one-off contracts would be.

The bureau found the conduct “blocked rivals’ business activities and forced developers into de facto exclusive dealing with Google,” per the examiner’s report. OneStore, the domestic South Korean Android app store, is the rival named most directly. The report does not name every developer paid under the program; it identifies the program and its effects.

How Project Hug Worked

The examiner’s report walks through the mechanics of the scheme. Google’s program offered game developers financial support for using Google services, including Cloud, Ads and YouTube, on a single binding condition. Developers had to launch their games on Google Play on terms at least as favourable as any rival app marketplace offered.

The contracts were also written so that Google’s financial support increased progressively as developers generated more revenue through Google Play, layering incentive on top of incentive. A flat payment asks a developer to weigh a fixed sum against the value of an alternative store; a progressive payment scales with the developer’s success on Play, raising the marginal cost of routing any business to a rival. The examiner’s report says the structure “created stronger incentives to prioritise Google’s marketplace.” That mechanism is the core of the bureau’s abuse case.

The shape of the program is consistent with what Google revealed about itself in earlier U.S. litigation. Google spent “hundreds of millions of dollars on secret deals with over 20 top developers” the company deemed most at risk of leaving for rival stores, according to a 2021 Epic Games complaint unsealed in the Epic v. Google antitrust suit. By the end of 2020, Google had signed deals with most of its Project Hug targets, including Activision Blizzard.

• A baseline of credits for Google Cloud, Ads and YouTube
• Revenue-share support that scaled up with Google Play sales
• An exclusivity clause requiring launch terms at least as favorable as any rival’s

The 20-developer figure comes from U.S. discovery, not from the Korean examiner’s report. The KFTC is using Korean billing records and the contracts Google signed with Korean game publishers to reconstruct the same scheme inside its jurisdiction. Two parallel reconstructions of the same program are arriving at overlapping conclusions.

The Fine That Could Land

South Korean competition law lets the KFTC fine a company found to have abused market dominance up to 6% of the “relevant affected revenue” the regulator attributes to the abusive conduct. The examiner’s report puts that figure at 14.16 trillion won ($9.1 billion). That ceiling is a maximum, not a floor; the full commission has discretion to set a lower penalty.

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

The bureau’s findings are not the final ruling. They are the examiner’s case, and Google’s written response goes into the same record before the full commission decides. Google has not publicly responded to the new allegations; the eight-week clock runs from the moment the company receives the report, not from the July 1 release. The company’s most recent on-record position on Project Hug specifically dates to 2021.

Google Play competes with other app stores on Android devices and on rival operating systems for developer attention and business. We’ve long had programs in place that support best-in-class developers with enhanced resources and investments to help them reach more customers across Google Play. These programs are a sign of healthy competition between operating systems and app stores and benefit developers tremendously.

That statement came from Google spokesperson Peter Schottenfels in an August 2021 response to The Verge, addressing the Epic Games antitrust complaint. It remains Google’s only on-record defense of Project Hug specifically.

The commission can also order behavioral remedies alongside any fine. The bureau’s recommendation calls for “corrective measures,” and earlier KFTC rulings against Google have required the company to stop mandating specific contract terms. A monetary penalty plus a conduct order is the pattern in past KFTC Google cases.

Google’s Recurring Seoul Problem

The Project Hug case is the third time the KFTC has moved against Google over Android market conduct in five years. Each prior action is now a precedent the commission can draw on, and a reminder that the new allegation lands on a regulator with a documented track record in this exact arena. The 2023 game-exclusivity ruling in particular addresses the same rival and the same conduct pattern. Earlier KFTC Google cases also remain under appeal, which shapes how the commission weighs remedies in the new case.

In September 2021, the KFTC fined Google 207.4 billion won ($176.9 million) over an “anti-fragmentation agreement” that prevented smartphone makers like Samsung from installing modified versions of Android, according to the regulator’s 2021 announcement covered by CNBC. In April 2023, the KFTC imposed a 42.1 billion won fine (~$32 million) over game exclusivity requirements that blocked rival app stores including OneStore. Both earlier fines are under appeal.

The 2023 ruling is the closest analogue to Project Hug. Both center on Google steering game developers away from OneStore. Both rest on contracts that the regulator found foreclosed rival distribution channels. The procedural posture matches: KFTC examiner’s report, company response, full commission decision.

What OneStore Stands to Win

OneStore is the rival the KFTC named most directly in the examiner’s report. The bureau found that Project Hug “significantly reduced developers’ incentives to distribute games through competing app stores, including South Korea’s OneStore.” OneStore is a domestic South Korean Android app store that competes with Google Play on commission rates. The store charges lower commissions, undercutting Google on price for the developers it can sign.

A binding KFTC finding against Project Hug would remove the financial pressure Google used to keep high-profile games off OneStore. The developer contracts at issue conditioned Google support on launch terms at least as favourable as any rival, meaning that any benefit a developer could extract from OneStore was effectively matched or exceeded by Google. The second-order effect runs through game developers, not OneStore itself: studios that could now capture higher margins on rival terms may re-enter the Korean market.

The case could also have a signaling effect outside Korea. Other app store regulators, including the European Commission and Australia’s competition authority, have already probed Project Hug in their own jurisdictions. A formal Korean abuse ruling would add a clean precedent to a growing pile. The Korea decision lands first because Seoul opened the file years before other regulators did.

• Free game studios to release on OneStore without losing Google financial support
• Reduce Google Play’s effective hold on premium Korean mobile titles
• Add a formal Korean precedent to parallel app-store cases in other jurisdictions

The benefit to OneStore is conditional, not automatic. A KFTC abuse ruling opens the door; it does not push studios through it. The market question, separate from the regulatory one, is whether Korean gamers and developers respond to the new economics.

The Eight-Week Clock

The next move belongs to Google. The company has eight weeks from receiving the examiner’s report to submit a written response and review the evidence. After Google’s response, the bureau will convene the full commission to weigh the case. The bureau said it plans to “issue a final ruling promptly” once due process is observed, but did not name a date.

Past KFTC cases have run anywhere from a few months to several years from examiner’s report to final decision. The 2023 game-exclusivity fine, for comparison, took roughly two and a half years from investigation to decision. The full commission can affirm, modify, or reject the examiner’s findings. Its ruling is the one that imposes any fine; the bureau’s report is the case the ruling is built on. The next public event on the calendar is Google’s response, whenever the company chooses to file it.

Frequently Asked Questions

What is Google’s Project Hug?

“Project Hug” is the code name Google used internally for a multi-year program that paid game developers to keep their games on Google Play. The KFTC’s examiner’s report refers to the same initiative externally as the Games/Google Velocity Program. The bureau says the scheme ran from July 2019 to March 2026.

How much could Google be fined?

Korean competition law sets the ceiling for an abuse-of-dominance fine at 6% of the regulator’s defined affected revenue. The bureau’s calculation of that revenue comes to 14.16 trillion won, or $9.1 billion. The full commission, not the examiner’s report, decides whether to impose a fine and at what level.

Has Google responded to the allegations?

As of publication, Google has not publicly responded to the examiner’s report released on July 1. The company has eight weeks from receiving the report to submit a written response and review the evidence. After Google’s response, the Market Surveillance Bureau will convene the full commission to weigh the case. The commission’s decision, not the examiner’s report, is what imposes any fine.

What is OneStore?

OneStore is a South Korean Android app store named in the KFTC examiner’s report as the rival most directly affected by Project Hug. It operates as a domestic competitor to Google Play, charging lower commissions than Google’s standard in-app purchase rate. The bureau says Google’s program suppressed OneStore’s market access.

Is this the first KFTC action against Google?

No. The KFTC fined Google 207.4 billion won (~$177 million) in 2021 over Android fragmentation agreements with smartphone makers, and 42.1 billion won (~$32 million) in 2023 over game exclusivity requirements. Both earlier fines are under appeal. The 2023 case, which also centered on OneStore and game developer contracts, is the closest analogue to the new allegation.