[Platform Power Abuse] Cautious About Regulation... Effective Measures Key to Restoring Competition

Planning - Platform Abuse in the COVID Era (Part 2)

"Minimum Standards to Protect Small Business Owners Must Be Discussed"
Concerns Over Winner-Takes-All Effects of Giant Platforms... Expert Recommendations

[Asia Economy reporters Seulgina Jo and Eunmo Koo] Since the COVID-19 pandemic, voices calling for the need to 'check' the abuse of power by giant platforms that have surfaced have been growing louder. However, the problem is that hastily creating regulations could extinguish the spark of innovation and cause domestic companies to fall behind in the borderless platform competition.

Ultimately, opinions are being raised that while excessive regulation should be prevented, minimal standards should be discussed to protect small business owners and SMEs. The key lies in measures that minimize the side effects of platform-driven winner-takes-all through revitalizing market competition.

Professor Minsoo Shin of Hanyang University’s Department of Business Administration stated on the 13th, "Market distortion caused by monopoly is subject to regulation," emphasizing the need for regulation appropriate to the circumstances. As a representative case, Professor Shin mentioned Google Play’s mandatory in-app payment policy, which prevents developers on its app market from establishing their own independent payment systems, saying, "The monopoly of giant platform operators that forcibly restricts the business freedom of tenant businesses and reduces consumer welfare must be stopped."

However, he repeatedly stressed the need for ‘effective regulation suited to the circumstances’ rather than simply enacting laws. This is because global platform giants like Google and Apple often evade legal frameworks, resulting in reverse discrimination where only domestic companies face double regulation.

There is also an opinion that minimal regulation should start at the level of protecting consumer welfare and small business owners. A fair trade law expert from a major law firm, who requested anonymity, pointed out, "It is necessary from the perspective of protecting small business owners," adding, "It is time to discuss standard types to judge whether business is being conducted under fair market competition." He added, "This is not about introducing excessive regulation," but "Even for new businesses in the growth stage that require minimal regulation, it is time to have discussions to present some standards."

On the other hand, Professor Kyutae Kwak of Soonchunhyang University’s Department of Global Cultural Industry drew a line, saying, "It is difficult to regulate or oversee all platform operators." Professor Kwak explained, "Rather than the government taking the lead in regulation first, public discourse is important," and "Through public discourse, consumers should be informed about how much profit platform operators gain from commissions and be able to make direct judgments." Professor Hyunkyung Kim of Seoul National University of Science and Technology’s Graduate School of IT Policy also expressed concern that "(excessive) regulation will hinder innovation in domestic platforms and worsen user welfare."

Ultimately, the consensus inside and outside the industry is that the key lies in revitalizing market competition first. Another law firm official diagnosed, "Winner-takes-all can only be resolved through competition activation." The official evaluated, "The commission issue basically stems from a lack of market competition," and "We need to create a structure where commission reduction is possible, and there is debate over the level of regulation as a methodological approach to this."

Experts unanimously agreed that the core is to build an ecosystem that minimizes the harms of platform monopolies such as excessive commissions and abuse of power without extinguishing the spark of innovation. They explained that competition in commission reduction and service competition driven by the industry should be enabled.