[Reverse Discrimination Caused by Regulation] "Fearing Loss of Digital Sovereignty," Global Giants' Domination of Han Platform Has Worsened

[Asia Economy reporters Seulgina Jo and Minyoung Cha] "It was only then that I realized most of my daily life was covered by Google. It was just a one-hour outage."

Junyong Kim, a man in his 30s who enjoys watching YouTube after work, experienced a frustrating disruption of his daily routine for about an hour due to a Google service outage in mid-December last year. This was because he lived his life with major systems in his home linked to Google Home, as well as Gmail, Calendar, and Cloud. Kim shook his head, saying, "I never thought an error occurring on one platform could affect me this much."

While domestic companies have been hampered by 'regulatory reverse discrimination' against overseas operators, the dominance of global ICT giants like Google and Netflix over domestic platforms has intensified since the spread of COVID-19. The Google service outage in December last year is a representative case that illustrates the strengthened power of global platform giants in the 'untact' (contactless) era. Even South Korea, a leading ICT powerhouse, was no exception. If this continues, there are growing concerns that the country could lose control of its platforms and potentially become a digital colony or a content subcontracting base.

◆Acceleration of Korean Platform Domination

According to the Korea Communications Commission and others on the 18th, since the first confirmed COVID-19 case in Korea in January last year, the market share of global platforms such as Google, Netflix, and Facebook has increased further. In the domestic online video distribution market, the combined share of Google YouTube, Netflix, and Facebook platforms reached 87.2% last year, up 23.6 percentage points from the previous year. The top three platforms by company are all overseas platforms. Meanwhile, the market shares of Naver TV and AfreecaTV, ranked 4th and 5th respectively, declined to 4.8% and 2.6%.

Among online video service (OTT) providers benefiting from the 'COVID-19 stay-at-home' trend, Netflix has solidified its dominant position. According to WiseApp, Netflix's payment amount in Korea last year was 517.3 billion KRW, a 108% increase from the previous year. The number of paid subscribers is also estimated to have reached a record high of 4.1 million. According to Nielsen Korean Click data from December last year, Netflix had the highest monthly active users (MAU) at 8.16 million, followed by domestic OTTs Wave with 3.7 million, TVING with 2.79 million, and Watcha with 1.5 million.

In the domestic internet search engine market, Google surpassed a 40% share, and in the application market, Google Play and Apple App Store's combined market share approaches 90%. It was confirmed that 98% of public apps are distributed through Google.

The onslaught of global platforms, backed by massive financial resources and scale, has intensified with the COVID-19-driven untact transition. The words of Kim Bongjin, chairman of Woowa Brothers, from a few years ago?"If this continues, in 5 or 10 years, foreign services will completely dominate the domestic market, leaving only users behind"?are becoming a reality. Professor Kim Hyunkyung of Seoul National University of Science and Technology pointed out, "The most serious problem is government regulation. Although platform competition no longer respects national borders, outdated and Galapagos-like regulations are maintained only for domestic platform companies. This is not just simple reverse discrimination but a repeated serious mistake."

◆"Domestic Platform Activation Needed"

Inside and outside the industry, voices are growing louder that policy support for domestic platforms and protective measures for the domestic ecosystem are urgently needed to prevent digital colonization and the outflow of digital content revenue overseas.

In particular, the 'app toll' controversy triggered by Google's forced in-app payment last year confirmed that a platform company with a dominant market position can shake the industry ecosystem simply by changing policies. This is why the opposition party demanded the government establish a task force (TF) to respond to global giant platform companies. Professor Kwak Kyutae of Soonchunhyang University criticized, "The biggest problem is that there is no platform to counter Google when it excessively raises commission rates in the domestic market," adding, "There is no market competition."

There are also increasing voices pointing out the outflow of domestic industry profits overseas. According to a survey by the Ministry of Science and ICT, Google is estimated to gain an additional 156.8 billion KRW domestically due to forced in-app payments. The Korea Internet Corporations Association and others issued a joint statement that day, saying, "The damage has been objectively confirmed," and urged the National Assembly to keep its promise to protect app developers and consumers by passing the Google Abuse Prevention Act (Amendment to the Telecommunications Business Act).

Some argue that in addition to policy support to nurture native platforms and restore market competition, temporary legal measures imposing certain obligations to protect the domestic industry?such as screen quota systems and content equal access rights?should be considered.

Concerns are also pouring in about 'Netflix dependency' and the risk of becoming a 'K-content production subcontracting base' for Netflix, which has played a major role in spreading K-content overseas based on large-scale investment funds and global infrastructure. In other words, it could be like "cooking porridge only to feed the dog." As dependence on Netflix grows from content production to distribution, the bargaining power of domestic businesses and producers is weakening. An industry insider emphasized, "Policy support is necessary to activate domestic platforms to avoid becoming a digital content subcontracting base."