Samsung Suffers Sales Fallout from App Throttling Scandal
Samsung’s market dominance in its home country is suffering a blow from a recent app throttling scandal caused by one of its built-in performance-enhancing apps on its Galaxy S22 phone series. The Game Optimising System (GOS) app was recently found to be responsible for slowing down around 10,000 non-gaming apps, including popular apps Netflix and TikTok. The scandal has reportedly affected sales of the Galaxy S22, part of the company’s high-end S line.
The Sammobile website reported this development on 4 April 2022, citing recent attempts by Korean telcos to increase subsidies on S22 purchases as a sign of declining sales. Local media sources such as the Korea Times added that the subsidies were applied by Samsung’s affiliate telecom service providers KT and LG UPlus since the beginning of April 2022. For example, the two carriers are offering up to US$410 (500,000 Korean won) in subsidies for buyers to purchase the S22 and S22 Plus models. These subsidies are in addition to the US$410 (500,000 Korean won) that buyers of the S22 Ultra have been able to receive through these companies since February 2022.
However, there have been no concrete figures showing the sales drop, the Korea Times report said, but they quoted a telecom provider official saying that “there is no clear decline in terms of sales value”. He said that this is because of intense competition between the Galaxy S series and Apple’s iPhone, whose most recent major OS update caused a battery drain problem that has since been fixed. A Samsung spokesman attributed the increased subsidies to a “difficult situation” in the mobile device market, saying that the subsidies were the result of consultation between the company and telecom service providers.
In addition to the subsidies, Samsung has since released an OS update allowing users to switch off the GOS app. The inability to deactivate the app was the main reason for user concerns, which were first reported on a South Korean tech forum in early March 2022. The GOS was ostensibly aimed at improving the performance of game apps on the phone, but users discovered that it was affecting the performance of thousands of Android apps. This scandal emerged at the same time as the company’s annual meeting and a high-profile launch of two new models in its more affordable A series.
Whether the company’s fortunes will improve as a result of the subsidies has yet to be seen. An analyst cited by the Korea Times, Lee Seung-Woo, projected that Samsung will be able to make a total of US$3.3 billion (4 trillion Korean won) this quarter, which is up by US$1.07 billion (1.3 trillion Korean won) from the last quarter of 2021. However, he warned that the prospects for future sales would not be good, saying that the GOS controversy dealt a big blow to the company’s credibility and that of its Galaxy mobile phones. This will be good news for smartphone makers in China and the United States, especially Samsung’s chief competitor Apple. It lost its global market leadership to Samsung in the first quarter of 2021 but bounced back on top with robust sales of its new iPhone 13 series at the end of the year.
Samsung is reportedly seeing falling sales of its Galaxy S22 smartphone series in South Korea as a result of the Game Optimising System scandal in March 2022.
Reports say that while no concrete data has been made public, telecom service providers have increased subsidies for new unit buyers to boost sagging sales in Samsung's home market.
While Samsung has released an OS update enabling users to deactivate the GOS on its phones, the scandal may be likely to hurt the company’s reputation and that of its smartphones moving forward, an industry analyst said.