KCC, Will They Win This Time... Tense 'Facebook Litigation Battle'

Second Trial Verdict of the 'Trial of the Century' on the 11th Next Month
Court to Decide Between KCC vs Facebook
KCC Lost in First Trial... Strives to Prove Usage Restrictions
Payment Issue for Network Usage Fees Expected to Influence Outcome

[Asia Economy Reporter Koo Chae-eun] The second trial result of the administrative lawsuit between Facebook and the Korea Communications Commission (KCC), known as the "trial of the century," will be announced on the 11th. The key variables in this ruling are expected to be how convincingly the KCC, which lost in the first trial, presents the ①'noteworthiness' of user damage, and whether the court broadly recognizes the content giant's ②'obligation to manage network quality.'

According to the industry on the 31st, the Seoul High Court Administrative Division 10 (Chief Judge Lee Won-hyung) will deliver the appellate ruling on the 'Lawsuit to Cancel the KCC's Disposition' around the 11th. Earlier, in March 2018, the KCC imposed a fine of about 390 million KRW on Facebook, claiming that Facebook deliberately changed access routes during negotiations over network usage fees with domestic telecom companies, causing disruptions for domestic users. Facebook filed an administrative lawsuit in response, and the court ruled in favor of Facebook.

The court's key basis for the ruling was that it did not consider Facebook's actions as 'usage restriction.' In its appeal brief, the KCC focused on arguing that Facebook's actions constituted 'usage restriction' under the Telecommunications Business Act and addressed issues related to responsibility for user damage. A legal industry insider said, "The KCC judged that user damage occurred and took action, which can be seen as a discretionary matter of the ministry, but there is criticism that the court interpreted 'usage restriction' too narrowly. How persuasively the KCC presents the criteria for judging user damage with interpretation and data will determine the outcome of the second trial."

The second trial court's judgment on the obligation to manage network quality is also important. In the first trial, it was judged that the obligation to manage network quality lies with telecom operators, not content providers, but with the passage of the amendment to the Telecommunications Business Act at the end of the 20th National Assembly, which imposes quality obligations on global CPs as well, expectations for a contrasting judgment are high. Although the act occurred before the legal amendment and may not be directly related to the ruling, if the KCC wins, calls for the 'network quality obligation of CPs' could increase. On the other hand, if the KCC loses, the momentum to criticize CPs for free-riding may weaken somewhat. It could also hinder future government intervention in the market related to network usage fees.

However, even if the KCC overturns the first trial ruling and wins, there is speculation that Facebook will appeal to the Supreme Court, leading to a 'prolonged dispute.' This is because the ruling itself has a significant impact on the relationship between CPs and ISPs. An industry insider said, "The network usage fee issue involves private contracts between telecom companies and content providers, so legal disputes and administrative lawsuit precedents may have a greater impact than legislation," and added, "especially as conflicts over network usage fee payments intensify, this ruling will become a benchmark."