Additional Regulatory Measures Targeting Big Tech Firms like Naver and Kakao

The Amendment to the Electronic Financial Transactions Act Likely to Be Reconsidered from the Beginning

[Asia Economy Reporter Kim Jin-ho] Regulatory authorities are continuously increasing pressure on big tech companies such as Kakao and Naver. They intend to revert the previous 'regulatory relaxation' that allowed conveniences in various businesses back to the starting point. Specific additional regulatory measures are expected to be announced soon.

According to the financial sector on the 11th, Go Seung-beom, Chairman of the Financial Services Commission, reaffirmed the principle of applying the same actions and regulations to big tech companies during a meeting with reporters the day before. Chairman Go said, "Same actions and regulations are necessary from the perspective of consumer protection and market stability."

On the same day, Cho Sung-wook, Chairman of the Fair Trade Commission, stated at a breakfast meeting of the European Chamber of Commerce in Korea (ECCK) held at the Four Seasons Hotel in Seoul that the policy direction for fair trade in the second half of the year will focus on resolving 'platform side effects.'

Accordingly, the Fair Trade Commission announced plans to establish a related division within its dedicated ICT team and expand investigative personnel to closely monitor anti-competitive behaviors on platforms. This means the Fair Trade Commission will significantly expand its regulatory authority over the rapidly growing platform industry.

Given the strong will of the regulatory authorities, the industry expects additional regulations soon to normalize the 'tilted playing field.' Currently, a likely additional regulatory measure is to block comprehensive payment settlement services such as the 'Naver Bank Account' included in the amendment to the Electronic Financial Transactions Act.

If the Electronic Financial Transactions Act passes, big tech companies will effectively engage in deposit and loan businesses from account issuance to card payment, but will not be subject to the same regulations as financial companies. Existing financial companies have strongly argued that this amounts to a complete 'privilege.'

Therefore, considering the precedent where authorities fully reconsidered refinancing loan platforms in response to complaints from existing financial companies, it is widely expected that the amendment to the Electronic Financial Transactions Act will follow a similar path. A financial sector official said, "Since strict principles have been decided, additional regulations on various issues that have caused controversy due to excessive privileges have become inevitable."

Meanwhile, due to the recent conclusion by financial authorities that platform insurance comparison services are 'intermediation' rather than advertising, KakaoPay's car insurance premium comparison subscription service is ultimately at risk of being discontinued. According to the insurance industry, KakaoPay, which had partnered with Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, Hana Insurance, AXA Insurance, and Carrot Insurance to operate the car insurance premium comparison service, will run the service only until the end of the financial consumer protection law's grace period on the 24th.