Digital Economy Alliance Opposition Statement on the 18th
"The introduction of pre-regulation on online platforms is nothing more than a 'copy-paste of European-style regulation.'
The Digital Economy Alliance issued a statement on the 18th opposing the Fair Trade Commission-led legislation on online platform regulation, stating, "We must be cautious to ensure that excessive online platform regulations do not cause the domestic digital economy to lose its growth momentum." The Digital Economy Alliance is a coalition of five organizations: the Korea Venture Business Association, Korea Startup Forum, Korea Digital Advertising Association, Korea Online Shopping Association, and Korea Internet Corporations Association.
Recently, the Fair Trade Commission is reportedly accelerating the legislation of the 'Online Platform Fairness Act (Onple Act),' which includes pre-regulation measures targeting domestic digital platform companies such as Naver and Kakao, as well as major U.S. IT companies. The bill is expected to be based on the proposal by Assemblyman Park Ju-min. Park’s proposal centers on allowing online platform operators to form groups to negotiate with intermediary operators and applying preferential commission rates to small businesses. It is anticipated to become the Korean version of the European Union (EU) Digital Markets Act (DMA).
The Digital Economy Alliance emphasized, "Currently, the online platform industry is diligently pursuing and implementing self-regulation in line with the policy direction of the Yoon Suk-yeol administration," adding, "The government ministries, including the Fair Trade Commission, as well as small business organizations and consumer groups, have spent months working together to develop win-win measures."
Major platform companies such as Naver, Kakao, Coupang, Woowa Brothers (Baedal Minjok), and Danggeun have been preparing self-regulation plans and win-win strategies since August last year by forming a 'platform private organization.' Naver launched the 'Naver User Protection and Self-Regulation Committee (tentative name).' Kakao implemented policies to freeze or reduce commissions for small and medium-sized merchants and shortened the settlement cycle for gift transactions. Kakao Mobility lowered taxi industry franchise fees to 2.8%.
Domestic companies are competing fully with overseas platform companies. In the online shopping sector, Alibaba Group’s overseas direct purchase site, AliExpress, has risen to second place in terms of domestic users. During this process, so-called 'counterfeit' products and low-priced Chinese goods have also been imported into Korea.
The alliance pointed out, "Introducing separate pre-regulations despite the absence of situations where specific online platform operators could abuse their dominance contradicts the Yoon Suk-yeol administration’s original pledges, fundamentally blocks the growth of native platform companies, and could cause companies to lose investment momentum in the future, which is very concerning."
They continued, "Major countries overseas are showing different policy directions tailored to their own circumstances regarding online platforms," adding, "The United States, feeling threatened in the digital hegemony competition with China and others, scrapped platform-related legislation based on judgments to protect domestic industries, the impact on domestic consumers, and the hindrance of future industrial drivers such as artificial intelligence (AI)."
Furthermore, they stated, "Online platforms are coexisting and growing together with small business owners and are industries that can lead reasonable consumption in an era of high inflation and low growth," and "The 1.66 million members of the Digital Economy Alliance request the government to support nurturing domestic online platform companies with global competitiveness." They called for creating win-win solutions for platforms, small business owners, and consumers together with the private sector.
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