Why the Fair Trade Commission Is Increasing Pressure on Platforms

Platforms Play a Crucial Role in the Digital Economy
Network Effects and Concentration Make Market Entry Structurally Difficult for Latecomers
Chairman Cho Seong-wook: "We Will Strengthen Monitoring of the Platform Market"

[Sejong=Asia Economy Reporter Joo Sang-don] The Korea Fair Trade Commission (KFTC), the main regulatory body for online platforms, is increasing pressure on platform companies because there is a significant risk that these companies may engage in unfair practices, and actual cases of abuse of dominant positions have occurred.

In fact, on the 15th, the KFTC imposed corrective orders and a fine of 207.4 billion KRW on Google for forcing smart device manufacturers to preinstall the Android OS. Regarding this, Chairman Cho said, "This case involved Google blocking the market entry of fork OSs (operating systems modified from Google's Android OS), which could have become strong competitors, thereby solidifying Google's market dominance in the mobile platform sector. By prohibiting device manufacturers from installing fork OSs on devices such as smartwatches and smart TVs, Google hindered innovation in the development of OSs for other smart devices, where next-generation platform competition is beginning."

The KFTC announced the results of the Google sanctions and revealed that the ICT dedicated team is currently investigating a total of three cases, including restrictions on app market competition, forced in-app payments, and the advertising market, signaling additional sanctions against Google.

Regarding Kakao and Coupang, KFTC Vice Chairman Kim Jae-shin recently stated, "We have received reports that major domestic mobility platforms discriminated against non-affiliated taxis and favored affiliated taxis in dispatching, and related investigations are underway. Additionally, concerns have been continuously raised that major online shopping platforms displayed private brand (PB) products in prominent positions while placing products from tenant sellers lower."

The KFTC recognizes that platforms play an important role in various fields within the digital economy, but due to network effects and concentration phenomena, it is structurally difficult for latecomers to enter the market. Therefore, efforts are needed to maintain a market structure where competition is active to ensure continuous innovation, growth, and enhancement of consumer rights. Since platform operators who have secured the market can engage in anti-competitive behaviors such as demanding exclusive dealing to maintain or strengthen their monopolistic position in existing markets or transferring their dominance to other markets, it is necessary to strengthen market monitoring.

Chairman Cho said, "The KFTC plans to strictly enforce laws without discrimination between domestic and foreign companies against anti-competitive acts by platform operators who have secured the market to maintain or strengthen their monopolistic position. We will strive to promote competition in the market, encourage innovative activities by companies, and enhance consumer rights."