Fair Trade Commission's Rapid Push for Platform Regulation Law... Opposition from IT Industry and AmCham

Opposition Statement on the 18th... "Only Domestic Companies Are Being Squeezed"

The 'Platform Competition Promotion Act (tentative name),' which includes preemptive regulations on domestic digital platform companies such as Naver and Kakao, is moving forward in the legislative process. Concerns in the IT industry have materialized as President Yoon Suk-yeol has supported the regulatory law, which was initially expected to be discarded.

The Digital Economy Alliance, consisting of five internet company organizations, issued a statement opposing the Fair Trade Commission's proposal on the 18th, stating, "The introduction of preemptive regulations on online platforms is merely a 'copy-paste of European-style regulations,'" and pointed out that "excessive online platform regulations could cause the domestic digital economy to lose its growth momentum, so caution is necessary." Major platform companies such as Naver, Kakao, Coupang, Woowa Brothers (Baedal Minjok), and Danggeun have been implementing voluntary regulatory measures and coexistence plans since August last year, including shortening settlement cycles, reducing franchise fees, and supporting financial costs through a 'platform private organization.'

The American Chamber of Commerce in Korea (AmCham) has also reportedly expressed concerns about the introduction of preemptive regulations. AmCham argued that the Fair Trade Commission's introduction of preemptive regulations on online platforms "contradicts the current government's original pledge, as there is no situation where a specific online platform operator can abuse its dominance," and claimed that "it could fundamentally block the growth of native platform companies and cause companies to lose investment incentives in the future."

They added, "Baseless and premature preemptive regulations will cause unnecessary price increases, cause small businesses to lose sales channels, and lead to a decline in consumer welfare," emphasizing that "instead of discussing new preemptive regulations, minimum regulatory measures should be sought using existing laws." AmCham plans to convey these concerns to the Fair Trade Commission through the Ministry of Trade, Industry and Energy. The Fair Trade Commission will revise and supplement the bill by reflecting the concerns of the industry and related ministries.

The direction of platform regulation seemed to solidify around voluntary regulation, which was a basic stance of the Yoon Suk-yeol administration. On the 14th of last month, the 'Telecommunications Business Act Amendment (Voluntary Regulation Act),' centered on voluntary regulation prepared by the Ministry of Science and ICT and the Korea Communications Commission, was approved at the Cabinet meeting. The IT industry welcomed this, hoping for self-regulation. However, the platform regulatory law promoted by the Fair Trade Commission has raised concerns to the extent that it is called the Korean version of the European Union (EU) Digital Markets Act (DMA).

The core of the Fair Trade Commission's proposal is preemptive regulation. It designates dominant platform operators in advance and imposes various obligations to prevent abuse of market dominance. Dominant operators are designated based on quantitative and qualitative criteria such as sales, number of users, and market share. The bill is expected to include provisions imposing obligations on designated operators, such as prohibiting self-preferencing, tying sales, and multi-homing restrictions. There is also consideration of imposing higher fines than those under the current Fair Trade Act in case of unfair practices.

The detailed contents are expected to be based on the bill proposed by opposition lawmaker Park Ju-min. Park Ju-min, a member of the Democratic Party's Euljiro Committee, which mainly deals with principal-agent relationships, proposed a bill that allows online platform operators to form associations to negotiate with intermediary operators and applies preferential commission rates to small businesses. Currently, about 20 related bills are pending in the National Assembly. The fact that the current government is basing its approach on opposition bills is also a cause for concern.

Meanwhile, the Platform Competition Promotion Act, the Fair Trade Commission's proposal, was discussed at the Cabinet meeting presided over by President Yoon Suk-yeol on the same day. President Yoon expressed caution regarding platform monopolies. The Fair Trade Commission, Ministry of Science and ICT, and Korea Communications Commission held a working-level meeting on the Platform Competition Promotion Act on the afternoon of the 18th but failed to reach an agreement.

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