The Opening of the 'Platform National Audit'... Intense Focus on 'Nakao'

Minister of Culture, Sports and Tourism Hwang Hee is attending the full meeting of the Culture, Sports and Tourism Committee held at the National Assembly on the 8th, delivering the settlement report. Photo by Yoon Dong-ju doso7@

[Asia Economy reporters Kang Nahum and Boo Aeri] The National Assembly will begin its audit schedule from the 1st. With the ruling party selecting the ‘platform economy’ as the key agenda for this audit, issues such as the monopolization by online platform companies like Naver and Kakao and their infringement on local businesses are expected to be the main targets from the very first day.

◆ Intense Focus on ‘Nakao’ from Day One = The National Assembly’s Culture, Sports and Tourism Committee will start the audit of the Ministry of Culture, Sports and Tourism from 10 a.m. on the same day. The first targets of the ‘platform audit’ are the webtoon companies Naver Webtoon and Kakao Entertainment. Kim Jun-gu, CEO of Naver Webtoon, and Lee Jin-su, CEO of Kakao Entertainment, appeared as witnesses. Lawmakers are expected to question these platforms about allegations of abusing their power against creators regarding commissions and copyrights.

These allegations were triggered by a statement issued on the 14th of last month by the Korea Publishing Culture Association titled ‘Urging Correction of Kakao and Naver’s Destructive Acts on the Publishing Ecosystem.’ The association pointed out, "Kakao, in the process of selecting its so-called original content exclusive works, is imposing an additional 20% distribution commission on publishers and authors under the pretext of providing extra marketing. This is a result of abusing its superior position."

Regarding Naver Webtoon, the association also claimed, "They impose unfair conditions requiring original web novels distributed by other distributors to be taken down under the pretext of webtoon adaptation," and demanded the government take strong action against these unfair practices.

The high commissions charged by the two major webtoon companies are also expected to be criticized. Naver and Kakao take about 30% of the revenue from works as commission. In particular, Kakao raises the commission rate up to 45% under the ‘advance royalty’ condition, where a certain amount of royalties is paid before revenue is generated.

◆ Probability-based Game Items Also Under Scrutiny = Issues related to probability-based items, a major revenue model in the gaming industry, are also expected to be raised. Earlier, Park Jung, the ruling party’s secretary of the Culture, Sports and Tourism Committee, demanded positive consideration of a legislative amendment to institutionalize the disclosure of probability rates for such items during questioning of the Korea Game Industry Association on the same day.

Park said, "Although the association has established and implemented voluntary regulations for disclosing probability grades of probability-based items in games accessible to youth for over six years, many social controversies arose earlier this year due to revelations of probability manipulation and the introduction of a dual probability system (complete gacha). After the controversy, voluntary regulations were hastily strengthened," he pointed out.

He added, "Since probability-based items are a major business model in our gaming industry and controversies continue, it is necessary to strengthen research functions on new business models and overseas cases," he proposed.

The focus of the National Assembly’s Science, Technology, Information and Broadcasting Committee audit is also expected to be on platform companies. As the audit begins for 11 related agencies including the Ministry of Science and ICT, no witnesses will appear due to delays in bipartisan agreement. Nevertheless, various platform issues such as infringement on local businesses, forced in-app payments, and free-riding on networks are expected to be raised in the audit sessions.

In particular, Im Hye-sook, the Minister of Science and ICT, making her audit debut on this day, is expected to maintain a stance warning against the social perception of domestic platform companies drifting only in a negative direction, which may lead to some clashes with lawmakers who are focused on criticizing platform companies.

For the Science and ICT Committee, witnesses are expected to appear starting from the Broadcasting and Communications Commission audit on the 5th. Witnesses from platform companies such as Coupang, Woowa Brothers, Kakao Mobility, Yanolja, Google Korea, Facebook Korea, Apple Korea, and Netflix Services Korea are expected to appear in large numbers. The attendance of witnesses such as Lee Hae-jin, Naver’s Chief Global Investment Officer, and Kim Beom-su, Chairman of Kakao’s Board, has not been confirmed due to delays in bipartisan discussions.

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