Next Week's 'Platform National Audit' Approaches... Tougher Crackdown on ICT Companies

Preview of the Science, ICT, Broadcasting and Communications Committee's National Audit

List of Witness Requests Currently Under Discussion at the National Assembly Science, ICT, Broadcasting and Communications Committee (As of the Morning of the 24th)

[Asia Economy Reporter Joselgina] The so-called ‘platform audit’ is imminent, putting the ICT industry on edge. The list of witnesses requested by the National Assembly’s Science, Technology, Information and Broadcasting Communications Committee (STIBC), which oversees ICT issues, includes representatives from the three major telecom companies as well as platform companies such as Naver, Kakao, Google, and Facebook, signaling a tougher crackdown on ICT. In particular, issues of monopoly and unfair practices by platform companies with overwhelming market dominance have become a focal point not only in STIBC but also in other standing committees.

◆"Nakao, Come Out" Platform-Focused Firestorm Expected

According to the National Assembly and industry sources on the 24th, the STIBC audit will begin on the 1st of next month targeting the Ministry of Science and ICT, and on the 5th targeting the Korea Communications Commission. With a comprehensive platform audit already anticipated, it is expected that lawmakers from both ruling and opposition parties will intensively question the sprawling expansion strategy of the giant Kakao, which oversees 119 affiliates.

This is due to growing controversy over Kakao’s platform monopoly causing side effects such as increased fees. Kakao Mobility, a subsidiary, recently attempted to raise smart call fees up to 5,000 won but withdrew amid severe backlash, and Kakao’s strategy to enter local businesses like hair salons has also come under scrutiny.

Currently, STIBC has requested witnesses for the Ministry of Science and ICT audit including Kim Beom-su, Chairman of Kakao’s Board, Ryu Geung-seon, CEO of Kakao Mobility, and Lee Hae-jin, Global Investment Officer (GIO) of Naver, and discussions are ongoing. However, since the summons must be delivered to witnesses at least seven days before the attendance date, the decision and notification must be made by that day for them to appear from the audit starting on the 1st.

In addition, representatives from Google (Kim Kyung-hoon, President of Google Korea), Facebook (Jung Ki-hyun, CEO of Facebook Korea), and Apple (Yoon Gu, President of Apple Korea), who have been embroiled in controversies over unfair practices by platform operators, are also on the current list of witnesses under negotiation. Since the ‘Google Fair Trade Act (Amendment to the Telecommunications Business Act)’ banning forced in-app payment policies by app market operators has passed, related questions are expected to pour in. Attacks on Netflix, which has faced criticism for free-riding on networks, are also anticipated to continue.

◆'5G Quality Controversy' Telecom 3 and 3N Also to Appear

The heads of the three major telecom companies?SK Telecom, KT, and LG Uplus?regular attendees of the STIBC audit, are also being considered to appear. Questions are expected to focus on the implementation status of the 28 GHz 5G base station construction, ongoing 5G quality controversies despite approaching 20 million subscribers, and conflicts over paid broadcasting content fees. However, considering recent trends, it is highly likely that executives familiar with operational details will be finalized instead. The representatives of these three companies have already been selected as witnesses for the Fair Trade Commission audit under the Political Affairs Committee.

Especially as the three telecom companies have effectively abandoned plans to build 28 GHz 5G base stations, a flood of related questions is expected, and criticism of the flawed policy is also emerging within the National Assembly. Evaluations suggest that it is time to discuss changes in government policy on 28 GHz 5G, considering frequency characteristics, current technology levels, and market realities where utilization conditions are not yet met.

Representatives of the large game companies known as the ‘3N’ have also been included in the witness list. Amid controversies over probability-based items in the gaming industry, STIBC is expected to focus on the industry’s self-help efforts to prevent unfair practices by global app markets and to activate market competition following the passage of the Google Fair Trade Act. Kim Young-sik, a member of the People Power Party, pointed out, "The 3N cannot be free from responsibility for the domestic app market being dependent on Google and Apple for over 10 years," adding, "Most games are not released on domestic app markets, forcing domestic users to use overseas app markets."

◆Will the Scolding Audits Ahead of the Presidential Election Repeat?

However, concerns are rising as the National Assembly, having declared a platform audit, competitively summons company representatives one after another. This is because it is blatantly confirmed that ICT platforms used by the entire nation are being targeted to secure votes ahead of the presidential election. Ultimately, it is expected to lead to showy scolding audits and public opinion-driven criticism. In some standing committees, there is even a mood of indiscriminately calling CEOs regardless of the industry.

An industry insider said, "Along with the techlash phenomenon (strong backlash against the growth and influence of big tech companies), the level of company criticism has increased compared to previous years." Another insider pointed out, "While it is true that platform companies have grown rapidly during the digital transformation process and there are side effects, it is a priority to find solutions while recognizing the efforts platform companies have made to resolve issues, rather than attacks aimed at votes or humiliating audits."