YouTube reaches agreement with South Korea over music bundling investigation
Premium Lite launched alongside a $22 million fund to support the local music industry as part of Google Korea’s deal to close antitrust investigation.
YouTube resolves bundling concerns in South Korea
Google Korea has reached a resolution with South Korea’s Fair Trade Commission (FTC), after it launched an antitrust investigation into the bundling of YouTube Music with YouTube Premium. The inquiry raised concerns that YouTube’s dominance in the market was unfairly hindering local streaming services. Now, the case has been closed with no financial penalties imposed on the company.
The FTC had accused Google of using its powerful position in video streaming to give YouTube Music an unfair advantage over domestic music platforms like Melon, Genie, and Flo. YouTube Premium launched in 2018, and offered users ad-free video viewing and YouTube Music in one package.
After currency conversions, YouTube Premium only costs $2 more than YouTube’s standalone music subscription. Coupled with the fact that 90% of Korea’s population actively use YouTube, the bundle quickly attracted Korean users at the expense of local streaming services.
Just two years ago, YouTube Music trailed Melon by over 2 million subscribers (4.03 million vs 6.89 million). Now, YouTube Music has surged ahead of its local competitors, with 9.79 million monthly active users. This compares to Melon’s 6.01 million, Genie Music’s 2.60 million, and Flo’s 1.76 million.
How YouTube responded
In response to the investigation, Google submitted a ‘consent decree’- a legal agreement allowing the case to be closed without further sanctions, as long as appropriate remedies are agreed upon. The FTC quickly accepted the proposal, prioritizing prompt action to protect local platforms from further harm.
Google proposed several remedies, including:
- Launching YouTube Premium Lite in South Korea– a more affordable subscription that offers ad-free video but excludes YouTube Music, background play, and offline downloads.
- Creating a 30 billion won (approximately $22 million) fund to support South Korea’s local music industry and artists.
“A consent decree enables us to implement corrective measures more quickly, without the need for protracted legal battles.”
Kim Moon-Sik, Director of Market Surveillance at the FTC
Mixed industry reactions
While the FTC accepted the agreement, many in the industry have expressed disappointment that the commission has not done enough. Not only did they fail to stop Google’s rise, but have also now allowed it without strong repercussions.
Critics argue that the measures don’t undo the competitive harm already caused, and that the introduction of Premium Lite as an alternative may do little to slow YouTube’s dominance (especially given that Premium remains an attractive option for users).
Instead, some believe that the Lite tier could reinforce YouTube’s dominant market position by offering a cheaper, attractive subscription tier. Others suggest that the damage to local platforms has already been done, and reversing YouTube’s dominance will be a major challenge.
For South Korea’s music industry, the $22 million fund is certainly a notable investment that will hopefully be useful. However, the long term implications of YouTube’s power in South Korea’s streaming landscape remain uncertain.