[W Forum] The Gap Between Government and Market on Platform Self-Regulation

Professor Kim Hyun-kyung, Graduate School of IT Policy, Seoul National University of Science and Technology

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Over the past two years, the government's strong public regulations embedded in online platform bills have been a contentious issue. Recently, the Presidential Transition Committee announced a policy for self-regulation of online platforms, which fortunately seems to have eased these discussions. However, the committee's policy lacks direction and specific details regarding self-regulation. In this situation, ministries that have long desired strong regulations on existing online platforms are claiming themselves as the main agents of self-regulation policies, raising concerns that self-regulation might lose its original meaning and go astray.

Self-regulation broadly refers to all activities undertaken by businesses or business associations as voluntary efforts to ensure market transparency and trust. From the perspective of the relationship with the government, types of self-regulation include voluntary self-regulation without any government intervention, approved self-regulation where the private sector regulates itself with government approval, delegated self-regulation where the private sector creates and enforces norms within a government regulatory framework, and mandatory self-regulation where the law enforces regulations if the private sector does not form its own regulations.

Except for voluntary self-regulation, all other types involve government intervention, and despite their names, mandatory or regulatory self-regulation heavily depend on government regulation, raising doubts about whether they can be considered true self-regulation. The government tends to pursue mandatory or regulatory self-regulation rather than voluntary self-regulation, while private market participants prefer the opposite. The gap between the government and private market participants regarding 'self-regulation' can cause confusion and conflict as significant as those caused by previous regulatory bill initiatives.

To find a type of self-regulation suitable for digital innovation, it is necessary to consider the characteristics of digital innovation. Digital innovation based on the internet inherently has a trans-territorial nature and openness, which limits traditional public regulations based on national sovereignty. Since new spaces can be created infinitely, it is impossible for the government to pursue and enforce public authority in all these spaces. Moreover, due to inherently rapid technological life cycles, concentration phenomena, and global trends?essentially 'speed' and 'change'?the rigidity of government regulation is difficult to apply. Considering the pace of technological development, it is desirable for market actors themselves to decide the standards and methods of regulatory enforcement.

However, questions may arise as to whether these actors can overcome the greed for malicious profit and establish and comply with desirable autonomous behavioral standards. They are compelled to comply with standards due to fear of consumer rejection and competitive elimination. Additionally, such a social atmosphere must be formed. Creating an environment conducive to compliance with self-regulation is precisely the government's role. In other words, the government's primary role is to create an environment where 'voluntary self-regulation' can function well. When it is proven that 'voluntary self-regulation' can no longer operate, government intervention through 'regulated or mandatory self-regulation' or 'co-regulation' should be considered.

Meanwhile, many of South Korea's laws are strong 'regulatory laws' disguised as 'promotion laws,' such as the 'Game Industry Promotion Act' and the 'Software Industry Promotion Act.' There is concern that a 'self-regulation promotion law' filled with similar 'public regulations' might be created. The government's role for successful 'self-regulation' is to encourage market participants to create and comply with desirable self-regulation standards themselves. This is not a matter to be pursued through legislation. Rather, abolishing and managing unnecessary regulations would be the best way to encourage self-regulation.