Government Draws Sword Against Platforms... Establishes Monopoly Review Guidelines and Regulates In-App Payments

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[Asia Economy Reporter Kang Nahum] The government is set to revise laws and regulations to create a fair platform ecosystem. While preparing support measures to nurture native platforms leading the global digital economy, it is also pushing to expand regulations to prevent a second 'Kakao outage incident.'

The Ministry of Science and ICT announced on the 29th the 'Digital Platform Development Plan for Innovation and Fairness' containing these details. This plan was jointly prepared by related ministries including the Ministry of Economy and Finance, Ministry of Employment and Labor, Ministry of SMEs and Startups, Fair Trade Commission, Korea Communications Commission, and Personal Information Protection Commission.

The plan envisions 'realizing a world-leading digital platform economy and society.' The government presented three major principles and nine detailed norms for the new digital platform order in Korea: 'Innovation and Global,' 'Autonomy and Fairness,' and 'Trust and Inclusion.'

First, it will establish 'Guidelines for Monopoly and Oligopoly Review' reflecting the characteristics of platforms. This is in response to criticism that the current guidelines under the Fair Trade Act are based on traditional industries and thus inadequate for properly supervising platform companies.

Accordingly, the government will set new standards reflecting key features of online platforms such as cross-network effects (where an increase in platform users affects benefits) and unclear market boundaries, and specify typical violation types to enable strict legal judgment.

Review criteria to effectively prevent corporate mergers and acquisitions (M&A) conducted by giant platforms for indiscriminate business expansion will also be revised considering platform characteristics.

Additionally, legal grounds will be established to activate competition among app markets and to prohibit forcing 'in-app payments,' a payment method for paid content provided within apps on app markets.

Unfair competition practices such as app markets using market dominance to restrict multi-homing (using competing platforms) will also be prevented. To prevent user harm and protect rights, the Korea Communications Commission and Fair Trade Commission will investigate the 'app market operation status.'

Alongside legal and institutional regulations, legal support will be provided for the 'Platform Autonomous Organization' to be formed by August next year to ensure effective self-regulation by platforms, and autonomous codes will be prepared by industry and sector.

The government will also add data centers above a certain scale and value-added telecommunications operators such as Naver and Kakao to disaster management obligations, and create a safe platform service foundation through facility distribution and diversification.

Specifically, when service disruptions occur, user notifications including damage relief information will be strengthened, and safe use standards for personal information will be established in areas closely related to daily life such as open markets and delivery services. Furthermore, to enhance the social value of platforms, eight principles including strengthening inclusiveness, responding to social issues, and promoting diversity will be established and encouraged for industry compliance.

The government plans to continuously monitor implementation status through the 'Inter-Ministerial Platform Policy Council' launched in July and strengthen cooperation by supporting private platform autonomous organizations.

Minister Lee Jong-ho of the Ministry of Science and ICT said, "The Digital Platform Development Plan is the first step in establishing Korea’s digital platform order and a strong national policy commitment toward leading the global digital platform economy and society. We will concentrate government capabilities to produce tangible results for the public and make this a milestone for realizing the new digital order."