[Mangmuim Seungcha Prevention Act] "Google Opposes Using YouTubers as Hostages... Blatant Power Abuse"

Over 80% of Traffic Generated
Dominated by Global CPs like Google
"Providing Creators with Misinformation
Creating Unfounded Anxiety"

[Asia Economy Reporter Lim Hye-seon] Google is taking a strong stance against the 'Network Usage Fee' bill being promoted by the National Assembly, using YouTubers as leverage, intensifying the long-standing conflict between Internet Service Providers (ISPs) and Content Providers (CPs). The 'Network Usage Fee Bill' is an amendment to the Telecommunications Business Act that imposes an obligation on CPs generating large-scale traffic to pay network usage fees to maintain network quality. It specifically targets Netflix and Google (YouTube), which account for half of South Korea's internet traffic. While ISPs argue that paying network usage fees proportional to traffic volume is a fundamental principle of the internet, overseas CPs like Google and Netflix counter that the fee demands are a harmful monopoly by network operators. [Related Article] 'Anti-Free-Riding Network Usage Fee Law'

According to the IT industry on the 24th, YouTube, operated by Google, openly opposed the bill by stating that "if the law is amended, we may have to consider changing our business operations in South Korea" during a public hearing held by the National Assembly's Science and ICT Committee. YouTube emphasized that the cost would be passed on to domestic YouTubers, reducing creators' profitability.

In response, ISPs said, "Google has outright declared its intention to engage in unfair practices," and argued, "If platform monopolies use their power to pass network usage fees onto creators, it is necessary to introduce strong platform monopoly regulation laws to control this."

ISPs explained that the network usage fees Google would have to bear are negligible compared to Google's revenue and operating profit, making it very unlikely that these costs would be passed on to creators. Alphabet, Google's parent company, recorded revenues and operating profits of approximately 362 trillion KRW and 110 trillion KRW respectively last year. From 2011 to September 10, 2021, Google recorded a total of 8.53 trillion KRW in market commission revenue in South Korea alone. YouTube's revenue structure only settles earnings for a very small number of top creators who meet certain conditions, such as having over 1,000 subscribers and more than 4,000 hours of annual cumulative viewing. Even then, YouTube takes 45% of advertising revenue. Revenue generated through YouTube and similar platforms is not even accounted for in official statistics.

The domestic dedicated internet line market size was only 491.3 billion KRW in 2020. Over 80% of domestic traffic is generated by global CPs such as Google YouTube and Netflix. ISPs stated, "They are spreading incorrect information that the passing of the anti-free-riding network usage fee law targeting creators could threaten the K-content industry and the internet ecosystem, creating vague anxiety."

ISPs also strongly refuted the argument that small and medium CPs would be caught within the scope of the law. They explained, "The bill applies to all telecommunications service providers and large-scale CPs designated by the president. According to this criterion, only five CPs?Google, Netflix, Meta, Naver, and Kakao?are expected to be subject to the law." Naver, Kakao, and Meta (Facebook) already pay network usage fees ranging from 30 billion to 80 billion KRW annually.

Regarding claims that the bill violates net neutrality, ISPs said, "The bill regulates CPs that connect to domestic ISP networks for the first time without paying fees and has nothing to do with net neutrality, which prohibits transit ISPs from charging additional fees."

ISPs emphasized, "Since a large amount of traffic is generated, continuous investment in networks and facilities is necessary to deliver this traffic. The free-riding of global big tech companies on the network causes deterioration of domestic internet infrastructure and will ultimately lead to the shrinking of the ecosystem, including creators."