Court Again Sides with Facebook... "No Recognition of Notability, KCC Fine Also Canceled" (Comprehensive)

Facebook-Bangtongwi Administrative Lawsuit 2nd Trial
Bangtongwi "Reviewing Whether to Appeal"

[Image source=AP Yonhap News]

[Asia Economy Reporter Seulgi Na Cho] In the second round of the legal battle between Facebook and the Korea Communications Commission (KCC) over allegations of intentional speed delays, the court once again ruled in favor of Facebook. The court upheld the original ruling that Facebook's actions could not be considered as significantly infringing on user interests. Facebook immediately welcomed the decision, while the KCC plans to review internally and consider further responses.

The Seoul High Court Administrative Division 10 (Presiding Judges Wonhyung Lee, Soyoung Han, and Eonju Sung) dismissed the appeal in the afternoon of the 11th regarding the KCC's disposition cancellation lawsuit. The court stated, "Facebook's act of changing access routes constitutes a restriction on use, but it is difficult to see it as a method that significantly harms the interests of telecommunications users."

Previously, Facebook arbitrarily changed access routes with SK Telecom, SK Broadband, and LG Uplus, causing user access delays, and was fined 396 million KRW by the KCC in March 2018. There were suspicions that Facebook deliberately slowed speeds to gain an advantageous position in network usage fee negotiations. However, Facebook filed a lawsuit in May of the same year, contesting the fine, and the first trial court ruled in favor of Facebook.

◆The Key Issues: "Significance" and "Restriction of Use"... Facebook Wins Both First and Second Trials

The second trial ruling came about a year after Facebook's first trial victory. The main issue in both the first and second trials was whether Facebook's actions constituted a prohibited act under the Telecommunications Business Act, specifically "acts that significantly harm the interests of users" and whether it amounted to "restriction of use."

Unlike the first trial court, which ruled that Facebook's arbitrary change of access routes caused delays and inconvenience but did not constitute a restriction of use, the second trial court ruled that it did constitute a restriction of use. However, it did not consider it a method that significantly harms the interests of telecommunications users as prohibited by the Telecommunications Business Act.

The court stated, "Even if significance is considered a separate requirement, the characteristics of telecommunications services and the actions of ISPs (telecom companies) and CPs (Facebook) must be comprehensively considered," adding, "Although the average response speed was somewhat reduced, inconvenience was felt only in some content such as videos, while access to posts and message writing remained as before. It is difficult to consider this significant," thus upholding the first trial ruling.

The court also found it difficult to objectively view the increase in complaints due to Facebook's access route changes. The court explained, "Although the number of complaints increased, it is subjective. In the case of SK Broadband, complaints increased and then slightly decreased, making it difficult to prove significance as claimed by the defendant (KCC)."

In particular, the court judged that the KCC's disposition was an abuse of discretion and ordered the full cancellation of the fine. It pointed out that some of the access route changes occurred before January 31, 2017, when Article 42, Paragraph 1 of the Enforcement Decree of the Telecommunications Business Act, which was the basis for the disposition, came into effect. The court stated, "There was no legal basis for the disposition, and imposing a penalty of 100 when only 50 was violated is an abuse of discretion," adding, "The court only judges abuse of discretion. The scale of the fine falls within the administrative agency's discretion, so the court cannot judge it and must cancel it entirely."

◆Facebook "Welcomes" Decision, KCC Regrets "Not Judging from the Perspective of Affected Users"

Facebook immediately expressed its welcome. Facebook Korea said, "We welcome the court's decision" and "will continue various efforts to protect Korean users."

On the other hand, the KCC expressed regret, stating, "Although there was user damage at the time, the court interpreted the requirement of significance conservatively." After internally reviewing the ruling, the KCC will decide whether to appeal to the Supreme Court. The KCC said, "We find it meaningful that the second trial court ruled that Facebook's actions constitute a restriction of use, unlike the first trial," and added, "We plan to actively promote improvements to related laws and systems to regulate discriminatory or interest-infringing acts against users."

Previously, the KCC appealed, citing evidence that Facebook bypassed access routes to Hong Kong and the United States without specific consultation or notice despite having sufficient contract periods with KT, resulting in Facebook's wireless response speed being 2.4 to 4.5 times slower than average. Last month, KCC Chairman Sanghyuk Han, who majored in law, told reporters, "Restriction of use cannot be quantitatively distinguished," and added, "If users feel frustrated and reluctant to use due to speed delays, the content provider should be considered to have restricted users."

Concerns have been raised within the industry. It is pointed out that the court's ruling in favor of the global content provider (CP) Facebook in both the first and second trials is tantamount to granting immunity. An industry insider expressed concern, saying, "Since the court did not recognize Facebook's act of changing access routes to reduce communication speed during network usage fee negotiations as illegal, the government has lost the means to sanction similar situations causing user damage in the future."

The background of this controversy lies in conflicts over network usage fees. This ruling came amid growing controversy over so-called "free riding" on networks by global CPs that generate massive traffic but do not properly pay network usage fees in Korea. The court ruling could inadvertently strengthen global CPs' free-riding behavior. Previously, the National Assembly amended the Telecommunications Business Act to legally require global CPs to have network stability obligations.

This content was produced with the assistance of AI translation services.