[Hyeon-Young Kwon's Data Innovation] Platform Companies, Innovation, and Mission

A Market Recognized for Future Value but
Monopoly and Regulation Controversies Persist

Innovation's Shadow Threatening Small Business Riders' Lives
Must Not Grow Any Larger

Ongoing Discussions on Social Responsibility
Creating a Cooperative Model to Be Proud of Worldwide

‘Nekarakubaedangto’. It is a newly coined term. It refers to the companies that young people nowadays most want to work for. The term is derived from the first letters of the company names Naver, Kakao, Line Plus, Coupang, Baedal Minjok, Danggeun Market, and Toss. There is also a similar term that adds Zigbang and Yanolja. All of these are information technology companies with much higher future value than their current status.

These companies all share the characteristic of being platform companies. They rely on network effects, where having more users benefits all users. Therefore, if they fail to monopolize the platform, they cannot be considered successful businesses. Naturally, they inevitably clash with monopoly regulations and user protection policies. Following Europe, which has taken the lead in regulating global platform companies, the United States is also moving toward regulating platform companies. Korea is on a different level from Europe, which lacks native platform companies, and is in a difficult position because following the U.S. could cause the domestic brand platforms, which are doing relatively well, to wither. Meanwhile, public opinion is unfavorable toward the monopoly battles of platform companies expanding even into neighborhood markets, making the regulatory authorities even more perplexed.

‘GAFA’. This term refers to Google, Apple, Facebook, and Amazon. These global big tech companies and Korean platform companies share many similarities regarding regulatory issues. The common factor is the internet and data. The U.S. is a country that imposes strong regulations on network platforms such as telecommunications businesses, to the extent that it forced the monopoly operator AT&T, similar to Korea Telecom in the 1980s in Korea, to split into seven companies. However, it has operated a lenient system for the internet under the pretext of innovation. Of course, there are complaints about this system. Voice calls and text messages by telecom companies are heavily regulated, but internet calls and internet messaging services are not regulated, which raises questions. Despite the controversy, internet innovation services are still not subject to telecommunications law regulations.

Korea is the same. Telecom companies like SKT, KT, and LGU+ obtain licenses and are subject to rate regulations. However, platform companies are classified as value-added telecommunications service providers and are exempt. Unlike when the regulatory system was designed, the situation has now reversed. Platform companies earn more money and have a brighter future. Disputes arise over the outdated system. Discussions about imposing network usage fees on Korean companies like Naver, just as YouTube and Netflix earn money through the world's best telecommunications networks, are only the beginning.

Data is an even bigger issue. Seeing Europe strengthen personal data protection laws to regulate U.S.-based big tech companies, China and Japan have followed suit. If a country requires that its citizens' personal data be processed only within that country, big tech companies must bear enormous investment costs. If personal data is mishandled, they face unimaginable fines or penalties based on global revenue. If a company providing personalized services through AI or big data analysis is ordered to share that data with competing businesses, platform companies can no longer enjoy the fruits of innovation alone. This is the right to data portability and MyData services. This is just the beginning, and countries worldwide are competitively developing regulatory policies for data platforms.

Until now, the internet and data were regarded as keys to opening the future. Everyone believed that a happy digital economy would be unlocked by these keys. However, after experiencing and observing, concerns have arisen. Innovative services threaten taxi drivers' jobs, delivery services jeopardize the livelihoods of small merchants in market alleys, and platform companies often fail to guarantee the quality of life for developer workers or the safety of riders, frequently appearing in the news. If the workplaces we so eagerly want to join and the innovative services we so enthusiastically embraced lead to despair and even betrayal, it is time to carefully reconsider.

Korea can no longer find answers from other countries' examples. It is the first country to implement a digital economy in the shortest time with faster telecommunications networks, accumulated data, capable tech companies, and users than any other country. Fortunately, swift movements are being detected. Leading players like BankSalad, Baedal Minjok, Coupang, Danggeun Market, Naver, and Kakao have begun discussing the social responsibility of platform companies. The government setting the stage and platform companies cooperating on their own is commendable as a start. It may even create a new cooperative regulatory model worthy of being presented to the world.

More support is needed to make these efforts a successful model. First, immature regulatory legislative competition in the political sphere must be connected to the new cooperative model. Genuine public discourse based on participation must proceed, and its results must be firmly supported by legislation. Next, consistent government support and cooperation are necessary. All regulatory authorities?competition regulators, personal data and data regulators, financial regulators, and general regulators?must participate in this cooperative model and enforce consistent and coordinated regulatory policies.

However, above all, entrepreneurs, bureaucrats, politicians, and users themselves must realize that the true owners of platform companies are the users. If this is understood, platform entrepreneurs gathered together will recognize whether they are truly pursuing ‘genuine innovation’ or merely enjoying ‘everyone’s fruits’ alone in regulatory blind spots, forgetting those benefits. Furthermore, they must have the courage to take on the mission of responsible entrepreneurs leading the national economy.

Innovative services of platform companies are without exception indebted to the small but great traces of users' lives. Every day, every moment, trivial activities such as searching, online chatting or conversations or meetings, ordering meals, shopping for daily necessities, trading unwanted items, and even sending pocket money or small gifts are all activities that sustain platform companies. I earnestly hope that platform companies and the government, who have joined together, will never forget this core competitiveness and avoid empty talk.