Political Circles Snapping at Every Opportunity... "Only Foreign Platforms Benefit"

[NeKao, Becoming a Global Tech Company②]
Representative Overregulation 'Internet Real-Name System'
Attacking Portals in the Name of Reform
Expanding Foreign Platforms Amid Political Offensive

"Ten years ago, due to the 'Internet Real-Name System,' domestic online platforms gradually went downhill, while foreign video platforms like YouTube benefited. The current so-called 'portal reform' could lead to similar results."

This is the protest of an official from a portal site. The Internet Real-Name System, introduced in 2007, was a system that required real-name verification using resident registration numbers to use internet site bulletin boards. It was introduced to prevent malicious comments or defamatory posts. When the government expanded the real-name system to internet site bulletin boards with more than 100,000 daily visitors, the number of affected sites exceeded 160. The biggest victim was PandoraTV. PandoraTV, the first-generation domestic video sharing platform, lost its top position to foreign video platforms like YouTube at that time. PandoraTV's market share, which was 42% in 2008, plummeted to 4% in five years, while YouTube's share soared from 2% to 74% during the same period. It is difficult to explain the rise and fall of the two companies by the real-name system alone, but it is clear that the system had an impact. Users circumvented regulations by arbitrarily selecting countries on YouTube.

The Internet Real-Name System was eventually ruled 'unconstitutional' by the Constitutional Court. The court judged that the system had little public benefit, stating that "illegal posts did not significantly decrease, users fled to overseas sites, and issues of reverse discrimination between domestic and foreign operators arose." However, netizens who left for foreign platforms like YouTube in search of freedom of expression did not return. PandoraTV ended its service last January and disappeared into history. The Internet Real-Name System is considered a representative excessive regulation that caused the decline of domestic platforms. A portal official expressed concern, saying, "Under the name of portal reform, a 'second Internet Real-Name System' incident could happen again."

Naver Under Fire

With next year's general election approaching, portals are once again becoming scapegoats. The Korea Communications Commission plans to conduct an inspection to see whether Naver artificially intervened in its news search algorithm. This follows political claims that Naver artificially applied media popularity rankings, influencing search results. The political sphere is criticizing the monopolistic structure of portals. They argue that portals abuse their market dominance not only in news but also in shopping and search terms, distorting distribution structures and harming small business owners and micro-entrepreneurs.

In response, a Naver official emphasized, "Small business owners are our partners and inseparable from us." They added, "In the online commerce market, such as Smart Store, smooth distribution of small business owners' products and content is essential for Naver's business to operate normally." They also explained that various support measures like 'Project Flower' and 'Fountain Fund' are being operated for co-growth with small and medium-sized business owners.

Furthermore, Naver refuted political claims through its official bulletin board, stating, "There is no element in the news search algorithm that classifies, distinguishes, or reflects media bias." Naver said, "We conducted reviews through a review committee composed of external experts and even considered participation through party recommendations," adding, "It is impossible to introduce elements that bias the algorithm toward a specific political inclination or raise suspicion."

If a portal provides unfair and distorted information, its service reliability will decline, and naturally, netizens will turn away according to market logic. In this obvious sequence, portals would not bring trouble upon themselves, and portal reform is commonly viewed in the industry as politically charged excessive regulation. Meanwhile, foreign platforms like Google and YouTube are expanding their presence in the domestic market. According to data compiled by the U.S. marketing research firm SEMrush, last month the most visited website in Korea was YouTube (with a cumulative 2.6 billion visitors), followed by Google (660 million), and Naver (400 million).

The On-Platform Act Dragged Out for Two and a Half Years

Since early 2021, reflecting the government's stance on establishing a new regulatory framework for online platforms, a total of 14 bills related to the Online Platform Fairness Act (On-Platform Act) have been proposed and are pending in the National Assembly. Recently, the Fair Trade Commission has shown movements to prepare online platform regulations similar to the European Union's Digital Markets Act (DMA). However, the DMA targets platforms with European revenues exceeding 6.5 billion euros, market capitalization over 65 billion euros, and services in three or more member states. It is widely analyzed as a law aimed at restraining American big tech companies.

A portal industry official said, "The DMA is intended to target foreign companies like Google and Amazon, not EU domestic companies," adding, "Korea also needs a system to protect and nurture domestic platforms." So far, domestic online platform regulatory bills have literally regulated only Korean online companies. Google, YouTube, Twitter, Instagram, and others often could not be punished even if they violated the law. Korean companies have been subject to reverse discrimination in Korea.

In May, the National Assembly Legislative Research Office stated in a report on the On-Platform Act, "Discussions on online platform regulation should be conducted from a balanced perspective between competition regulation and innovation/growth, not confrontation," and "It is necessary to consider a step-by-step, organic legislative approach centered on amendments to the Fair Trade Act."

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