The Target of This Political Affairs Committee Audit Is Platforms... Witnesses Including Kakao's Kim Beom-su Adopted

'Kakao Gapjil Incident' Accelerates Fair Trade Commission's Institutional Improvements

[Asia Economy Reporter Joo Sang-don] The main target of the National Assembly's Political Affairs Committee's upcoming audit is expected to be online platforms. The committee has summoned witnesses for the audit, including Kim Beom-su, Chairman of Kakao's Board, Kang Han-seung, CEO of Coupang, and Bae Bo-chan, CEO of Yanolja.

On the 22nd, a National Assembly official stated, "This Political Affairs Committee audit will focus on pointing out unfair practices by platform companies such as Kakao and Naver," adding, "Both ruling and opposition parties are preparing to strongly criticize these companies."

Earlier, the Democratic Party's dedicated organization for gapjil issues, the 'Euljiro Committee,' held hearings from the 7th to the 10th with leading platform companies in various sectors such as Coupang, Kakao, Baedal Minjok, Yanolja, and Zigbang, along with small business owners and worker groups who are in conflict with these platforms, to listen to their damage cases. In Kakao's case, Kakao Mobility, the de facto monopoly operator in the taxi-hailing app market, sparked a gapjil controversy after raising taxi-hailing fees and introducing a paid membership for taxi drivers. Ultimately, Kakao announced a win-win plan that includes withdrawing some paid taxi-hailing services and businesses, and establishing a 300 billion KRW mutual growth fund over the next five years with its affiliates to support small business owners, taxi drivers, and substitute drivers. However, public criticism remains strong.

The Fair Trade Commission (FTC) is accelerating efforts to establish regulations to strengthen oversight of online platforms, prompted by incidents such as the 'Kakao Gapjil Incident.' Previously, the FTC proposed the "Act on the Fairness of Online Platform Intermediated Transactions," which governs the transactional relationships between platforms and merchants, to the National Assembly. It is also pushing for amendments to the "Act on Consumer Protection in Electronic Commerce" to strengthen regulations against unfair practices by platforms toward consumers. The last remaining area is regulation of unfair practices that may occur between platforms themselves. To this end, the FTC plans to soon prepare a draft of the "Online Platform Sector Unilateral Conduct Review Guidelines (tentative name)" to be applied when determining platform monopolies.

The core of the online platform review guidelines, scheduled to be enacted by the FTC next month, is to clearly present the criteria for determining market-dominant businesses. The Monopoly Regulation and Fair Trade Act prohibits abuse of market-dominant positions, and to regulate this, it is necessary first to determine whether a specific business holds a dominant market position. The Act presumes a business to be market-dominant if a single company’s market share exceeds 50%, or if three or fewer companies hold a combined market share of 75% or more, and sanctions the abuse of such market dominance. Until now, market share was mainly assessed based on sales revenue, but for online platforms, it is difficult to judge actual market share by sales alone. Therefore, going forward, the FTC plans to comprehensively consider factors such as the number of users, downloads, intermediary transactions, and data volume held.

Additionally, the FTC plans to include typical types of unfair platform practices in the review guidelines. Cases such as Kakao Mobility, where a platform operator participates in the business it intermediates and favors its own services over competitors’?known as 'self-preferencing'?will be highlighted. Other major unfair practices to be included are obstructing 'multi-homing,' where customers use multiple platforms simultaneously, and 'lowest price guarantee demands,' where platforms require their partners to apply prices equal to or lower than those offered to competitors.