[Exclusive] Fair Trade Commission's Platform Regulations to Be Differentiated by Market

'Dinosaur Platform' Industry-Specific Regulations
Separate Markets for E-commerce, Search, Messenger, etc.

The Fair Trade Commission is pushing forward with a plan to categorize markets entered by online platforms according to their nature, such as the 'e-commerce market' and the 'messenger market,' and designate dominant operators for each market.

According to related government departments on the 12th, the Fair Trade Commission is preparing detailed provisions of the 'Platform Fair Competition Promotion Act (draft)' based on this concept. The core of this bill is to pre-designate key platform operators with monopoly power that influence the market and strengthen monitoring to prevent abuse of dominant market positions. Although the Fair Trade Commission announced plans to enact the 'Platform Fair Competition Promotion Act' on December 19 last year, it did not disclose specific designation criteria. The related industry is concerned that excessive standards targeting only domestic companies might be established.

The Fair Trade Commission has settled on an approach to classify markets by their nature, such as 'e-commerce,' 'search,' and 'messenger,' and designate regulated companies by sector. Instead of unconditionally selecting specific platform companies as regulated entities, it will measure dominance in each market and select designated companies accordingly.

[Image source=Yonhap News]

For example, if Naver is judged to have overwhelming dominance only in the search market, Naver will be subject to pre-regulation only as a dominant operator in that market. Regulations will apply only to prohibited acts in the search market (such as self-preferencing, tying sales, and restrictions on multi-homing). Even if Naver is a platform company with high sales, it will not be regulated for self-preferencing or tying sales in markets where it does not have high dominance, such as the messenger market.

The Fair Trade Commission is unlikely to use simple indicators like 'sales' alone as criteria for judging market dominance. To clearly measure the dominance of platform companies, it is likely to introduce judgment criteria that consider factors such as influence as a 'gatekeeper,' 'data collection and utilization capabilities,' and 'number of service users.'

This is because it is difficult to calculate market share based on sales or evaluate the dominance of platform operators when free services are provided. The Fair Trade Commission also specified in the 'Guidelines for Reviewing Abuse of Market Dominance by Online Platform Operators' announced in January last year that such criteria will be used to evaluate the market dominance of platform operators.