Growing Criticism Over Government Jurisdiction Dispute Regarding Onple Act
Broadcasting Commission Holds Debate Without Opposition for Justification
Industry: "Lack of Opinion Gathering" "Will Become Ineffective Double Regulation"
[Asia Economy Reporter Minyoung Cha] The Fair Trade Commission (FTC), a post-regulatory agency, has been pushing ahead with legislation to preemptively regulate platform operators such as Naver and Kakao, sparking ongoing controversy.
As platforms are considered the cornerstone of innovative growth in the Fourth Industrial Revolution era and the core of the digital economy, it is essential to gather opinions from various stakeholders and engage in intense debates to reach consensus during the legislative process. However, the FTC-led 'Onpeulbeop (Online Platform Fairness Act)' has immediately overturned the 'minimum platform regulation' principle agreed upon by multiple ministries, and has been criticized for lacking sufficient opinion-gathering procedures, including ignoring the objections raised by the ICT regulatory authorities.
In particular, contrary to the original intent of protecting consumers, the platform regulation has escalated into a turf war between the FTC and the Korea Communications Commission (KCC), leading to sarcastic remarks questioning "for whom this law is intended." The platform industry is pouring out concerns that this could stifle market innovation due to potential double regulation.
Criticism of the One-Sided Justification Forum Without 'Opposition'
According to related industry sources on the 12th, the 'Online Platform Fairness Act Forum' held in a webinar format at the National Assembly the previous day did not include the Internet Enterprise Association, which consists of platform operators subject to regulation. Neither the KCC, the Ministry of Science and ICT (MSIT), the ICT regulatory authorities, nor members of the National Assembly's Science, Technology, Information and Broadcasting Committee (STIBC) were separately invited. Only some members of the Political Affairs Committee attended.
The forum drew attention as it was held while the Onpeulbeop, submitted in January, had been pending in the National Assembly for over two months. For the FTC, which has staked its fate on the bill, this was an attempt to rekindle momentum for its passage as it became increasingly difficult. However, the exclusion of academics, government officials, politicians, and industry representatives who opposed the Onpeulbeop turned the event into a one-sided 'justification-building event,' drawing criticism. Led by FTC Chairman Seongwook Cho, the FTC has recently been applying all-out pressure on stakeholders, academia, politicians, and the administration to pass the Onpeulbeop.
An industry insider who requested anonymity said, "During the legislative notice period for the Onpeulbeop, opposition opinions from the platform industry and experts were not reflected, and the original draft was hardly revised," adding, "It was just a token forum held after deciding the direction in advance." For sensitive and important issues like platforms, it is crucial to gather stakeholders' opinions and engage in intense debates to build social consensus during policy formulation and legislation.
Since the FTC announced its proposal defining the relationship between platform companies and tenant companies as a vertical hierarchical relationship, the platform industry has expressed opposition. There have been criticisms that the new law would be difficult to apply to foreign companies, resulting in reverse discrimination against domestic companies. It is tantamount to demanding domestic platform companies, for whom big data is a key competitive asset, to disclose trade secrets. While the FTC cites overseas legislative cases such as the European Union (EU) as grounds for promoting the Onpeulbeop, critics argue that these cases, aimed at protecting their domestic markets and SMEs from foreign platform operators like Google and Facebook, differ significantly from Korea's reality.
The KCC, the ICT regulatory authority, also shows clear discomfort over the lack of consultation with the FTC. A KCC official acknowledged, "There are overlapping regulatory areas between the FTC and KCC," recognizing concerns about double regulation. He added, "This was a part that required prior consultation, but it turned into an inter-ministerial confrontation," and said, "We will focus on enhancing legislative consistency."
Controversy Over FTC Bypassing KCC
The conflict between the FTC and KCC over platform regulation dates back to last year. In June of last year, the FTC's Competition Policy Bureau announced its plan to promote the Onpeulbeop at the 6th Anti-Corruption Policy Council, citing that some platform operators have grown influential and are exercising monopolistic market dominance. The FTC's proposal mandates platform operators to draft contracts with tenant companies and includes grounds for post-facto sanctions against acts such as coercing economic benefits, shifting losses, interfering with management activities, and retaliatory measures.
The ministries even differ on the definition of platform operators. The FTC argues in the Onpeulbeop that platform operators "only mediate others' transactions and do not mediate others' communications, so they do not fall under value-added telecommunications service providers." Therefore, they claim the Telecommunications Business Act, which regulates telecommunications service providers under the KCC's jurisdiction, does not apply.
In response, the KCC counters that value-added telecommunications service providers mediate others' communications using telecommunications facilities, so regardless of transactions, communication, or information exchange, they fall under telecommunications mediation services and are subject to the Telecommunications Business Act. This is why the platform regulation is interpreted as a turf war over regulatory authority within government ministries during the final stages of the administration.
After the legislative notice in September last year, the FTC's Onpeulbeop quickly passed through the Regulatory Reform Committee review, the Ministry of Government Legislation, the Vice-Ministerial Meeting, and the Cabinet Meeting within about three months. The National Assembly's STIBC is the body that put the brakes on it.
The STIBC strongly opposes the FTC's special law, calling it a "self-plagiarized law." According to an internal review report by the STIBC, except for five articles, the FTC's bill largely reproduces the current Fair Trade Act. It merely replaces the subject of each article from "business operators" to "online platform intermediaries and online platform users." Twenty-six articles follow the FTC's wording exactly. This violates the 'necessity and inevitability' of a special law.
Separately from the FTC, the KCC is promoting the 'Online Platform User Protection Act,' proposed by Democratic Party lawmaker Hyesook Jeon of the STIBC. While broadly similar to the FTC's proposal, it differs in that it imposes regulations on large-scale platform operators, includes provisions protecting not only tenant companies but also users, and contains extraterritorial regulatory clauses. Senior expert Sang An Jeong of the Democratic Party stated, "Concerns from the industry such as personal information protection and the application of standard contracts will be continuously supplemented through amendments during the bill subcommittee process."
Platform Companies Subject to Regulation Are Uneasy
The platform companies are the ones suffering from the inter-ministerial conflict. If the two laws pass separately through the Political Affairs Committee and the STIBC, platform companies will inevitably face overlapping regulations. The National Assembly is discussing consolidating the two bills at the policy committee level, but there has been no progress.
Moreover, the FTC announced the legislative notice for the Electronic Commerce Consumer Protection Act (E-Commerce Act) on the 5th, following the Onpeulbeop. A representative from the Korea Internet Corporations Association said, "Domestic internet operators emerged about 20 years ago and have only been profitable for about five years, so this is an industry that needs growth support," adding, "Even the first-step regulator, the KCC, finds this burdensome, so we cannot understand why the post-regulatory FTC is trying to apply a special law with detailed mandatory provisions to areas that could be resolved with existing online terms."
Academics point out that understanding the regulatory ecosystem must come first. Professor Minsu Shin of Hanyang University's Business School said, "The important thing is not the regulatory body but that the two ministries agree and create a completed form of the law," adding, "The Onpeulbeop has legal blind spots and is difficult, and the KCC's bill needs consideration on whether it can be effectively applied to domestic and foreign companies once passed by the National Assembly."
Professor Hyunkyung Kim of Seoul National University of Science and Technology said, "It should be reviewed from a zero base," criticizing, "(The Onpeulbeop) preemptively defines platform operators as dominant even though market abuse has not occurred and imposes various obligations not seen anywhere else in the world." She called it "legislative populism that appears every year at the end of an administration to secure regulatory jurisdiction through laws."
Voices are emerging that a minimum regulation principle across ministries is crucial for platform innovative growth that will lead the digital economy in the future. Earlier, MSIT Minister Kiyoung Choi criticized the increasing online platform regulations, saying, "The minimum regulation principle was agreed upon by MSIT, KCC, FTC, and the Ministry of Culture, Sports and Tourism together," adding, "It is not desirable to keep creating new laws and increasing regulations."
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