[2021 National Audit] Yoon Young-chan "Kakao's Octopus-like Expansion?…Need to Facilitate Better M&A"

Democratic Party's Yoon Young-chan Criticized During National Assembly Audit

[Asia Economy Reporter Minyoung Cha] On the 5th, during the National Assembly Science, Technology, Information and Broadcasting and Communications Committee's (STIBC) audit of the Korea Communications Commission, criticism arose expressing concerns about excessive regulation of the domestic platform industry represented by Naver and Kakao.

Democratic Party lawmaker Yoon Young-chan stated at the audit, "Except for China, South Korea is the only country in the world that has its own platforms, and these platforms play a positive role while competing against giant platforms."

Yoon pointed out, "There are worrisome aspects in the current discussions as platforms are being regulated indiscriminately," adding, "It is said that Kakao is expanding like an octopus through mergers and acquisitions (M&A), but M&A among tech companies has a somewhat different pattern."

He continued, "Without M&A, startups cannot exit (investment exit strategy)," and added, "In the U.S., 97% of exits occur through M&A with large companies, whereas in South Korea, it is only 0.5%."

He emphasized, "South Korea needs to create an environment where tech companies can perform M&A more effectively," and "Only then can the ecosystem be revitalized."

Han Sang-hyuk, Chairman of the Korea Communications Commission, responded, "Although platform companies currently have significant social influence, I believe policy measures should be prepared considering their overall impact and boundaries with overseas platforms."

He added, "Our commission's basic stance is that regulation should focus on preventing unfair environments that block new businesses or new creators from entering the market."