"There are concerns that Google's request to export map data could escalate security threats amid confrontation between South and North Korea," the land ministry said in a statement.
South Korea's strict National Security Law prevents Google from exporting government-supplied maps on the grounds that it could expose the location of sensitive military installations.
Because the 1950-53 Korean conflict ended with a ceasefire rather than a peace treaty, the two Koreas remain technically at war.
It was forced to use a third-party server when it first rolled out Google Maps in the South in 2008, offering a limited, bare-bones version of its services.
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Google argues that the South Korean law is outdated and unfairly restricts the company from providing a full range of mapping services, such as driving directions, public transit information and satellite maps.
The US tech giant backed up its complaint by claiming it could offer a wider range of services for isolated North Korea -- including driving directions from the capital Pyongyang to the country's main Yongbyon nuclear complex, and locations of the North's notorious labour camps.
In its statement on Friday, the government said Google had "turned down" the offer.
South Korea is among a handful of countries -- along with China and Russia -- where Google is not the number one ranked search engine.
The homegrown Naver search engine -- which only uses government-supplied maps that camouflage sensitive installations -- is the domestic leader in search and mapping services.
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