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The South Korean government caused a wave of panic throughout the internet industry. The country’s antitrust regulator has announced it will enact the toughest competition laws outside Europe to curb the influence of big technology companies.
In December, the South Korean Fair Trade Commission, with support from President Yoon Seok-yeol, will propose a proposal modeled on the Digital Markets Act of 2022, the European Union’s landmark law to rein in big US technology companies. announced that it was planned. The bill also appeared to target South Korea’s own internet conglomerates in the same vein as the Alphabet, Apple, and Meta of the world.
The commission said the law would designate certain companies as dominant platforms and restrict companies from using one online business location to expand into new areas.
Then last week, the agency abruptly reversed course. Following fierce opposition from South Korean industry lobbyists and consumers, as well as the U.S. government, the Japan Fair Trade Commission announced it would delay formal introduction of the bill to solicit more opinions.
It’s unclear when or if the bill will move forward. The timing is complicated by a key general election in April. The conservative People’s Power Party, led by Yun, is trying to wrest real power in Congress from the opposition party, the Democratic Party of Japan, which holds the majority. The survey found public support for the regulations, with many of the constituencies the bill says would benefit, such as small businesses and independent taxi drivers, typically voting for the Democratic Party of Korea.
The bill’s postponement was a temporary victory for South Korean internet companies, which are dominant at home but have little global influence, and have been working behind the scenes to oppose the bill. They argued that the bill was unnecessary and would ultimately benefit China’s emerging competitors.
Regardless of the outcome, the incident signaled a growing push for tighter regulation of technology companies in Asia. It also highlighted that South Korea’s concerns now mirror the United States’ own concerns about the influence of its own powerful technology giants.
In South Korea, Naver is the preferred search engine and mapping service over Google. Coupang has emerged as a strong player in e-commerce due to its efficient delivery, while Kakao is a ride-hailing-based and widely popular messaging service in the country.
U.S. tech giants have previously accused the country’s regulators of overreach, arguing that their protectionist policies created an uneven playing field. But this time, Korean companies led the protests.
Park Sung-ho, chairman of the Korean Internet Companies Association, known as K-Internet, said the regulation would limit growth opportunities. Members of this group include Naver, Kakao, Coupang, and Korean units Alphabet and Meta.
“The dominant platform here will be replaced within a few years by another platform and the cycle will repeat,” Park said. “This is like taking a big, strong student with the potential to be an athlete and preventing him from practicing prematurely out of fear that he will become a bully.”
The European Union’s digital markets law, which takes effect next month, will curb the influence of so-called gatekeeper platforms that provide dominant technology services. Companies such as Apple, Amazon, Alphabet, Meta, and Microsoft have announced changes to the way they operate to comply with the new rules.
But unlike South Korea, Europe does not have a growing homegrown tech giant whose operations could be subject to regulation.
Han Ki-jeong, chairman of the Korea Fair Trade Commission, said in a written statement to the New York Times that new regulations are necessary. The country’s digital economy is thriving, but “behind the innovative services and rapid growth are frequent abuses of power by platforms that dominate a small number of markets,” he said.
Naver, Kakao and Alphabet declined to comment on possible regulation.
The proposal, known as the Platform Competition Promotion Act, reflects Yun’s own evolution in how aggressively he oversees technology companies. Two years ago, he campaigned on the principles of “self-regulation” and minimizing government intervention.
South Korea’s reliance on an interconnected web of services was demonstrated in late 2022 when a fire at a facility housing Kakao’s servers knocked the service offline for more than a day and disrupted communications across the country. This became clear. At the time, Yun said his administration would investigate whether cocoa was a monopoly and whether it needed to be regulated like “national infrastructure.”
In November, Yun criticized Kakao’s ride-hailing app for abusing its monopoly position, calling it “arrogant” and “unethical.” He said Kakao’s majority-owned unit, Kakao Mobility Corporation, offered low prices to eliminate competitors, but raised prices again after becoming a monopoly. He called on the committee to take steps to prevent abuses by dominant technology companies.
Kim Min-ho, a law professor at Sungkyunkwan University, said Yoon’s change in position is likely related to the elections scheduled for April, and that his party is targeting small-business owners and taxi drivers. He said he is trying to gain the support of delivery service workers and others. He has supported the opposition’s position to regulate big technology companies. Some small and medium-sized enterprises have voiced support, according to the Korean Federation of Small and Medium Enterprises, whose survey found that 84% of respondents were in favor of the law.
In what is expected to be a close election, Kim said Yoon “doesn’t want to lose voters” because there are enough people who support technology regulations that could affect the outcome.
South Korean regulators also encountered protests from U.S. authorities. In a statement, the U.S. Chamber of Commerce called the proposal “deeply flawed.”
It added further stress to already strained economic relations between the two countries. South Korean officials are dissatisfied with two laws enacted under the Biden administration, the Inflation Control Act and the CHIPS/Science Act, which have cut back on some of South Korea’s key industries: electric vehicles and semiconductors. He claimed that it was a threat.
Jose W. Fernandez, the State Department’s undersecretary for economic growth, energy, and the environment, said at a press conference this month that he hopes South Korea will consider U.S. concerns about the proposed bill, just as the U.S. government will listen. . I went to Seoul to discuss IRA, CHIPS, and science law issues.
South Korea’s antitrust agency announced this week that it would discuss the bill with the U.S. Chamber of Commerce.
Baek Eun-seop, chairman of the Korea Platform Seller Association, which represents about 1,500 internet companies, said the rules would “trickle down” and hurt small and medium-sized businesses. These smaller players are familiar with the rules and often operate on multiple major platforms.
“Ultimately, we’re going to bear the brunt of that,” said Baek, who runs a small e-commerce company called EG Tech. “We won’t survive.”
Asked whether he thought the delay was a sign that authorities would water down the regulations or shelve them altogether, he was skeptical. He said he believes it shows regulators are reorganizing and listening to industry concerns.
“The Fair Trade Commission will not change,” he said. “At the end of the day, they’re going to come after us.”
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