The South Korean government unleashed a wave of panic across the internet industry: The country’s antitrust regulator said it would enact the toughest competition law outside Europe, curbing the influence of major technology companies.
The Korea Fair Trade Commission, with the backing of President Yoon Suk Yeol, said in December that it planned to make a proposal modeled after the 2022 Digital Markets Act, the European Union’s landmark law to rein in American tech giants. This bill also seemed to target South Korea’s own internet conglomerates just as much as the Alphabets and Metas of the world.
Then last week, the agency suddenly shifted course. After a furious backlash from South Korean industry lobbyists and consumers, and even the US government, the Fair Trade Commission said it would delay the bill’s formal introduction to solicit more opinions. It’s not clear when, or even if, the bill will advance. The timing has been complicated by a critical general election in April.
The delay was a temporary victory for South Korean internet firms — dominant at home but with little global influence — that lobbied behind the scenes against the bill. They had argued that the legislation was unnecessary and would ultimately benefit emerging competitors from China.
Regardless of its outcome, the episode signaled a growing appetite for more-stringent regulation of technology firms in Asia. It also underscored South Korea’s concern that now mirrors America’s own apprehension about the influence of its powerful tech giants. In the past, it was American tech giants that accused the country’s regulators of overreach, arguing that their protectionist policies created an uneven playing field. But this time, Korean firms led the protest.
Park Seong-ho, chairman of the Korea Internet Corporations Association, said the regulation would limit growth opportunities.
“A dominant platform here will be replaced by another in a matter of years, and this cycle will repeat,” Park said. “It’s like prematurely preventing a large, strong student with the potential to become an athlete from training out of fear he will become a bully.”
The European Union’s Digital Markets Act, which goes into effect next month, restrains the clout of so-called gatekeeper platforms that offer dominant technology services. Firms like Apple, Meta and Microsoft have announced changes in how they operate to comply with the new rules.
But unlike South Korea, Europe does not have thriving homegrown technology giants whose businesses may be challenged by regulation.
Han Ki-jeong, chairman of the Korea Fair Trade Commission, said in a statement that the new regulations were necessary. While the country’s digital economy has flourished, he said, “behind the innovative services and rapid growth lies frequent abuse by a few market-monopolizing platforms.”
Naver, Kakao and Alphabet declined to comment on the possible regulation.
First Published: Feb 18 2024 | 11:15 PM IST