When Calculating Market Share, Include Subscribers and Download Numbers
Startup Platform Business Strategies Inevitably Disrupted
[Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC) will release as early as next month the "Online Platform Sector Unilateral Conduct Review Guidelines (tentative title)" containing specific criteria to determine whether online platforms hold monopolistic positions. The core of the guidelines is to comprehensively consider not only related sales revenue but also the number of users and downloads when assessing a platform operator's market dominance. As the need to strengthen regulations on platforms has recently come to the forefront, the KFTC appears to be accelerating the preparation of these guidelines. Once the criteria for judging monopolies are specified, significant changes to the business strategies of platform companies that have expanded operations based on subscriber acquisition are inevitable.
A senior KFTC official said on the 16th, "We are in the final stages of establishing the online platform review guidelines," adding, "We plan to announce them for administrative notice after the Chuseok holiday at the earliest, and then finalize the guidelines through deliberation and resolution at the plenary meeting."
The review guidelines serve as a kind of guideline containing specific review criteria and examples of violations according to relevant laws. They will include detailed content on how to view monopoly standards.
The reason the review criteria for platform companies are attracting attention is that they differ from previous guidelines, which judged market-dominant operators based solely on sales revenue. Many platform companies offer services by encouraging free subscriptions. Since this does not immediately translate into sales, under the existing guidelines, it is difficult to consider them market-dominant operators. Therefore, the KFTC has decided to also consider subscriber numbers, download counts, and the amount of data held when judging platform market share. For example, Kakao Mobility, which provides taxi-hailing and designated driver brokerage services, had sales of about 280 billion KRW last year. To judge monopoly status based on sales revenue, one would have to compare KakaoT's taxi-hailing sales with the total market sales. However, applying the newly created online platform review guidelines, KakaoT can be judged as a market-dominant operator based on the fact that over 90% of taxi drivers nationwide are subscribed to KakaoT.
If the KFTC establishes the review criteria next month based on this, disruptions to the strategies of startup platforms that grow by increasing subscriber numbers through free services are inevitable. If judged as a market-dominant operator, competitive restriction acts such as blocking new competitors' market entry are prohibited under the Fair Trade Act. A platform industry insider said, "We agree with the KFTC's intention to consider user numbers and other factors that reflect actual market share when judging the market dominance of existing leading operators," but added, "However, since this could block the emergence of platforms aiming to grow through free services, consideration should be given to exempting startup companies below a certain sales scale from these rules."
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