[비즈한국] U.S. politicians and interest groups are escalating pressure on the South Korean government's Big Tech regulations, using tariff negotiations as leverage. With a bill recently reintroduced in the U.S. House of Representatives that would allow the U.S. government to intervene if South Korea unfairly regulates U.S. platforms, the Information Technology and Innovation Foundation (ITIF), a major U.S. tech policy think tank, has again emphasized the need to scrap the proposed 'Platform Fair Competition Promotion Act' (Platform Act).
At the same time, domestic industry experts and scholars are highlighting the necessity for appropriate regulations on the unfair practices of global platforms alongside policies to promote local platforms. Caught between the controversy over reverse discrimination against domestic industries and mounting trade pressures, the new government is tasked with finding a solution that balances technology sovereignty with trade risks.
'Anti-Platform Act' proposed in U.S. Congress, uncertainty over platform regulation grows
On the 18th (local time), the ITIF released a report titled 'Korea’s Policy in the Trump-China Era: Broad Tech Innovation, Not Export-Led Growth,' which addressed the need to boost productivity in the service sector and called for the withdrawal of the Platform Act currently being pushed by the Korea Fair Trade Commission (KFTC). The analysis suggests that regulations intended to protect small and medium-sized enterprises (SMEs) may end up excessively constraining large corporations, hindering the Korean economy and providing windfall benefits to China. Previously, the ITIF released a report at the end of last year titled 'Why Korea Should Resist New Digital Platform Laws,' followed by another report last month pointing out the need for Korea to eliminate trade barriers.
The Platform Act, which began full-scale promotion in 2023, originally focused on a 'pre-designation' approach to quickly block unfair practices by pre-identifying market-dominant players. However, during the push, it was shifted to an 'ex-post estimation' approach, which involves evaluating market dominance and imposing sanctions only after illegal activities occur.
This bill intended to include provisions to designate some companies as dominant players based on market share and the number of users, and to prohibit unfair practices such as restricting multi-homing (using competing platforms) and self-preferencing. Although the criteria are not yet finalized, it is expected that not only U.S. firms like Google and Meta but also domestic platforms Naver035420 and Kakao035720 would be presumed dominant, leading to widespread concerns about reverse discrimination against domestic companies.
The ITIF report assessed the Platform Act and ex-post regulation by stating, "It reflects a determination to expand the authority of agencies in the digital market and to focus particularly on protecting small-scale market participants." As one of the steps Korea should take to restore growth, it recommended, "Before adopting the Platform Act as a new ex-ante regulatory regime, the KFTC should rigorously evaluate whether the market failure is something that existing laws cannot address, and (if there are no other means) postpone broad structural regulations and focus on the enforcement and improvement of the current Fair Trade Act."
Is 'Strategic Industrialization' the answer? Balancing industry protection and 'pinpoint' regulation
Platform regulatory policy faces a complex dilemma. While there is strong demand for powerful sanctions to prevent Big Tech companies from abusing their market dominance, domestic and international interests are deeply intertwined. The domestic digital industry, including local platform companies, consistently raises the issue of reverse discrimination. An industry official remarked, "Foreign platforms have weak domestic footprints, making effective sanctions difficult. They cleverly evade everything from disclosing revenue data to tax burdens and various regulations, while only Korean companies end up bearing the double burden." 'Pinpoint regulation' aimed solely at Big Tech is also not easy, as the U.S. has continuously expressed concerns over moves to tighten regulations on its own Big Tech firms.
Lee Bong-eui, president of the Platform Law and Policy Association, noted, "Content platforms have the potential to create significant economic value through complex, multi-layered structures involving data, algorithms, and revenue sharing, extending beyond mere intermediary spaces connecting creators and consumers." He added, "As the weight of platforms in the national economy grows rapidly, major countries are already establishing platform policies based on public-private cooperation to strengthen their own platform industries and secure data sovereignty."
As the U.S. reveals moves to use platform regulation as a tool for trade and diplomacy, the argument that domestic industry protection and strategic management of the platform industry are necessary is gaining weight. The prevailing view is that strategic regulation is needed to minimize the impact on domestic operators.
At a related seminar held at the National Assembly on the 19th, Jeon Sung-min, a professor of business administration at Gachon University, explained, "Content platforms like YouTube are different from traditional businesses. They create a problem where Google earns fees from Korean creators, Korean consumers, and Korean companies as advertisers, yet our tax authorities cannot levy any taxes because the revenue is recorded in Singapore. Platforms are evolving geopolitically."
Google is reducing its reported domestic revenue by attributing it to its Asia-Pacific regional headquarters (its Singapore entity). The Korea Academic Society of Financial Management estimated that Google's actual domestic revenue could reach 12 trillion won. The appropriate corporate tax based on this would be around 518 billion won. In contrast, the total corporate tax paid by its three local entities—Google Korea, Google Cloud Korea, and Google Payment Korea—amounted to only 24 billion won.
Professor Jeon emphasized, "The reality is that Korea regulates its own companies equally and discussions on strengthening regulations take precedence over industrial promotion. We need a policy shift that recognizes the content industry as a national strategic industry and balances creator protection, autonomy, and technological innovation."
The 6·3 presidential candidates have different approaches to platform-related pledges. The Democratic Party plans to push for the legislation of an 'Online Platform Fair Trade Act,' including pre-designation regulatory methods for large platforms like Naver, Kakao, Coupang, and Baedal Minjok, if they take power. This bill is characterized by stronger regulations than the government and People Power Party's versions, focusing on protecting small business owners and workers, such as addressing delivery commission controversies.
The 10-point pledge of Democratic Party presidential candidate Lee Jae-myung includes the cultivation of K-content, such as national support for the entire production process of K-content, fostering K-culture platforms like OTT, and reaching 50 trillion won in cultural exports. While People Power Party presidential candidate Kim Moon-soo has not presented direct policy pledges regarding the platform industry, he has proposed "a country good for business and job creation" as a way to revitalize the economy, and his stance on platform regulation is that he "will crack down on unfair practices of online platforms."
The uncertainty of the policy direction has further increased with the possibility that platform regulation itself could be used as a card in tariff negotiations, following the 'restrictions on the export of high-precision maps,' which the Trump administration has defined as a non-tariff barrier. According to the U.S. federal legislative information system, a bill related to curbing discrimination against U.S. platform companies by South Korea, submitted by Representative Carol Miller (Republican) on the 4th, has been referred to the relevant standing committee for deliberation. Although the original text of the bill has not been released, it is presumed to be an extension of the 'Anti-Platform Act' that was automatically scrapped after being stalled in the previous session.
Seo Jong-hee, a professor at Yonsei University Law School, pointed out the limitations of the system currently being pursued by copying European platform regulations. Professor Seo explained, "Europe regulates overseas platform businesses with the intent to protect its own industry, but the Korean bill does not include content reflecting the protection of its own platforms. There has been almost no impact assessment. It is a point that requires double and triple consideration."
There are also suggestions that legal legitimacy should be sufficiently considered in the process of preparing platform regulations. Park Joon-young, a professor of law at Gyeongsang National University, mentioned, "Existing economic laws such as the Fair Trade Act, the Standardized Contracts Act, and the E-commerce Act are responding reasonably well. Similar to the German case, where they designated Google, Meta, Amazon, Apple, and Microsoft as dominant platform operators by amending existing laws separate from the EU law, it would be appropriate to establish platform competition policy through amendments to the existing Fair Trade Act."