The implementation of South Korea’s Platform Competition Promotion Act, aimed at designating major platform players like Google, Apple, Naver, and Kakao as ‘market-dominant operators’ to combat unfair practices such as tie-in sales and exclusive agreements, has been indefinitely postponed. The Korea Fair Trade Commission (KFTC), overseeing the process, cited “sufficient dialogue with the industry” as the reason for the delay. However, critics argue that the government has succumbed to pressure from both the United States business sector and domestic industries.
KFTC Vice Chair Cho Hong-sun announced on Feb. 7, “We intend to gather further input on the Platform Act, taking into account its market implications,” adding, “The timing for releasing the bill is now uncertain, and it may be extended due to the consultation process.” Initially, the KFTC aimed to unveil the bill before the Lunar New Year holidays.
Cho also addressed the ‘pre-designation system,’ a key aspect of the bill, stating, “We are exploring methods to regulate platforms efficiently while reducing the industry’s load,” and remarked, “We are open to determining its implementation.” This suggests that the pre-designation system could undergo reassessment, automatically categorizing platforms as ‘market-dominant players’ based on factors such as revenue, market share, and user base to facilitate swift regulation. The objective of this system is to safeguard smaller platforms and merchants from the competitive challenges posed by larger entities.
At first, the KFTC was enthusiastic about enacting the Platform Act promptly to tackle the anti-competitive behaviors of major platforms. On Jan. 24, KFTC Director Yook Sung-kwon remarked, “Postponing the bill would damage the KFTC’s longstanding reputation,” expressing his belief that “Concluding agreements between departments shouldn’t be overly time-consuming.” However, the KFTC’s stance underwent a significant shift within a mere two weeks.
The KFTC’s change in stance primarily stems from notable opposition from the U.S. business community, the domestic platform sector, and academic circles. The US Chamber of Commerce has recently publicly objected to a proposed act, expressing worries about the perceived haste in enacting the legislation. Charles Freeman, Senior Vice President for Asia at the US Chamber, released a statement cautioning Seoul against rushing the implementation of the regulations and urged for transparency and open discussions with Korea’s antitrust regulator, stressing that “an action of this magnitude requires.”
The opposition, particularly from small and medium-sized venture firms expected to benefit from the legislation, was deemed decisive. Last month, the Korea Venture Business Association officially declared its opposition, citing concerns that “innovation efforts by venture firms would be hampered, leading to decreased investment and ultimately growth stagnation.” While there were supporting organizations such as the Korea Federation of Micro Enterprises and the Korea National Council of Consumer Organizations, the KFTC appeared to lag in public opinion battles.
