Why the Fair Trade Commission's Power Grows in Judging Competition Restrictions of 'Alssongdalsong' Platform Companies

[Asia Economy Reporter Eunju Lee] As the platform economy era fully unfolds, the Korea Fair Trade Commission's (KFTC) economic analysis capabilities are becoming more important than ever. This is because the KFTC's market interpretation has a growing impact on companies amid conflicting conclusions from competition authorities around the world on similar issues. In the platform industry, there is a palpable atmosphere of heightened tension, with close attention being paid to the KFTC's trends.

On the 5th, competition authorities from various countries delivered divergent judgments on competition-restricting practices such as 'self-preferencing' by major big tech companies. They differ in key criteria for determining illegal self-preferencing and in their evaluation of market impact. For example, even regarding big tech companies like Google prominently placing their own service content, conflicting conclusions have emerged. Europe, focusing on competition exclusion, views Google's actions as an abuse of market dominance and regulates accordingly, whereas Canada focuses on "improving service quality to enhance consumer welfare" and judges it as "acceptable."

In South Korea, the KFTC's market analysis capabilities have also become crucial in the platform era. Accordingly, in December last year, the KFTC appointed Lee Hwaryeong, former head of the Platform Economy Research Team at the Korea Development Institute (KDI), as the head of the Economic Analysis Division. The Economic Analysis Division supports other departments during investigations by providing precise analyses of market definition and competition-restricting effects. Since it is difficult to uniformly judge all self-preferencing acts by big tech companies as 'bad,' the division comprehensively assesses the degree of market competition restriction and the ultimate reduction in consumer utility.

The Economic Analysis Division is expected not to focus solely on either 'consumer welfare' or 'competition restriction.' Instead, it plans to consider the unique characteristics of platform companies that both restrict market competition and enhance consumer welfare. For example, in judging whether consumer welfare has improved, it takes into account the platform-specific characteristic of a 'two-sided market' (a market composed of two parties: consumers and service providers, with the platform company mediating between them). Rather than considering only end consumers as service users, it also includes merchants transacting with the platform as consumers to analyze complex impacts. Furthermore, even if consumer welfare is improved in the short term, in-depth analysis will be conducted on whether consumer choice may be restricted in the long term, thereby reducing welfare.

In this context, major domestic big tech companies in South Korea are closely monitoring the KFTC's trends, increasing tension. Especially after last year's 'Kakao blackout' incident, Kakao, which underwent comprehensive investigations by the KFTC, is reportedly highly tense. Multiple industry insiders stated, "Recently, Kakao has been known to have high tension, recruiting former KFTC officials and switching legal counsel to major law firms reputed for their ability to follow the KFTC closely." Coupang, also under the KFTC's watch, is known to be actively recruiting personnel from the KFTC, prosecution, and media to prepare for regulatory trends.

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