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Dr. Konstantin Matthies

Google Korea have announced that Google's Android open-source operating system annually contributes around US $3.97 billion to the Korea economy. Android is the operating system for most smart phones that are not iPhones, including Samsung and LG models. Unlike Microsoft Windows customers, Android users make no direct payments to Google.

On August 22, Google Korea released a report titled, "Android Impact: How the Android Ecosystem Supports Economic Impact in South Korea," the first study to quantify Android's impact on the Korean economy. According to the study, Android has contributed an estimated US $15 billion to Korea's GDP since the system's release in 2010. Dr. Konstantin Matthies, the report's lead author at the Singapore-based consulting firm AlphaBeta, explained that the report is based on interviews of 400 randomly selected consumers and was compiled by AlphaBeta researchers who did not rely on data provided by Google.

To determine how much consumers valued their Android systems, respondents were asked questions such as how much of an annual discount on their current mobile phone payments would they demand if asked to give up their current Android operating systems. The average annual worth of an Android device to Korean consumers was determined to be around US$134. Considering there are around 30 million Android users in Korea, researchers calculated that consumers receive around US $4 billion in annual benefits.

Furthermore, Google Korea claimed that Android's open source software has reduced costs for both firms and developers, which has lowered the prices of smart phones and triggered innovation-producing competition, thereby giving consumers a wider range of selection. By offering free programs that are competitive with features of Apple's iOS system, Matthies said, Android provided opportunities to more companies to make money.

"Because Android's open-source ecosystem gives all users free access, it has played an important role in allowing a wide spectrum of domestic companies, not just major producers like Samsung and LG electronics, to develop competitive products in a short period of time," said Kwon Nam-hun, Professor of Economics at Konkuk University. AlphaBeta concluded that these economic benefits led to an increase in smart-phone subscription, which contributed to Korea's annual GDP growth by an average of up to 0.27 percentage points (US $15 billion) from 2010 to 2015.

Yet skeptics say it's difficult to relate all of such economic impact exclusively to Android. "Samsung's Galaxy models also served an immense role in boosting Android subscription. Android basically applied a strategy that was 'win-win' for both Google and smart-phone producers," commented an anonymous source from Korea's IT industry. "Basically, Google employed a very shrewd game plan."

Google has been fined by the European Commission's Directorate-General for Competition for breaching antitrust laws. Contrary to Google's open-source narrative, the European Commission concluded that Google "stifled choice and innovation in a range of mobile apps and services" and "denied European consumers a genuine choice of services and the full benefits of innovation."

The report did not analyze the benefits that Google, developer of the Android operating system, reaped from consumers. It has been revealed that Google uses Android's search engines, email services and other features to analyze users' consumption patterns and secure a massive amount of user data. Matthies said the report focused only on the benefits of Android's open-source ecosystem. It did not analyze the taxes that Google owes, nor did it look at its effect on the overall global economic ecosystem.

By Lee Wan, staff reporter

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