Democratic Party Proposes Onple Act in the 22nd National Assembly
"A Signal That Hinders Venture and Startup Growth"
Concerns are growing in the industry as the political sphere pushes again for online platform regulations. There are claims that a cautious approach is necessary since such regulations could become shackles when domestic platforms compete in the global market. Voices are also emerging that the regulations could signal that not only large platforms but also ventures and startups can no longer grow.
On the 19th, the Digital Economy Alliance held a forum at the FKI Tower in Yeouido under the theme "Desirable Platform Policy Directions Amid Digital Hegemony Competition." The forum was held to seek desirable policy directions amid the ongoing push for platform regulation legislation.
The Digital Economy Alliance held a forum on the theme "Desirable Platform Policy Directions Amid Digital Hegemony Competition" at the FKI Tower in Yeouido. [Photo by Digital Economy Alliance]
On the 12th, Oh Ki-hyung, a member of the Democratic Party of Korea, introduced the "Act on the Regulation and Fairness of Online Platform Intermediary Transactions (On-Platform Act)" as the main proposer. This is the first online platform regulation bill introduced since the opening of the 22nd National Assembly. The Democratic Party has also formalized the promotion of the On-Platform Act as a party policy.
The bill is similar to the On-Platform Act proposed in the 21st National Assembly. It targets online platform operators with total sales of 500 billion KRW or more or those whose sales to domestic consumers exceed 3 trillion KRW.
The bill includes provisions such as ▲mandatory installation of information exchange blocking devices, so-called Chinese walls, for certain large-scale online platform intermediaries ▲establishment of standards for unfair trade practices by online platform intermediaries ▲dispute resolution systems between operators and investigation and handling of violations by the Fair Trade Commission ▲and regulations on the liability for damages of online platform intermediaries to maintain fair trade order.
As platform regulations initiated by the National Assembly resume, voices of concern have poured out from academia and industry. The reason is that regulations that do not consider the characteristics of the platform industry and the domestic market could have significant side effects.
First, due to the nature of the platform industry, companies that enter the market first often grow in scale by gaining consumer choice, resulting in a few companies dominating. Consumer choice leads to monopolies. Lee Dae-ho, a professor in the Department of Global Convergence Studies at Sungkyunkwan University, said, "We need to reconsider the premise of platform regulation that companies having monopoly power leads to market failure," adding, "There are advantages to monopolies, just as large language models (LLMs) are based on the large-scale data of major platforms."
There were also points made about considering the unique characteristics of the domestic market. The logic behind platform regulations pursued in the European Union (EU), which has a large market but no domestic platforms, or in India, where domestic platforms dominate the market, cannot be directly applied to Korea. Han Seung-hye, a senior researcher at the Digital Economy Research Institute, emphasized, "Not only do we have native platforms domestically, but the market is competitive without dominant operators," and added, "The trend of creating platform regulations globally should not be used as a basis for enacting laws."
The prevailing view is that legislation that does not consider the industry and market situation will rather cause side effects. In particular, there are concerns that startups, small business owners, and small and medium-sized enterprises (SMEs) belonging to the platform economy will suffer significant damage.
Choi Sung-jin, CEO of the Korea Startup Forum, expressed concern, saying, "It puts a cap on the growth of platform companies and sends a signal to the market that operating platforms in Korea is difficult," adding, "This could lead to a contraction in investment or mergers and acquisitions (M&A) for startups." Ultimately, this results in pushing domestic platforms to move overseas.
Yoo Jeong-hee, head of the Venture Business Association, cited the results of a survey conducted earlier this year targeting small and medium-sized venture companies related to platforms. According to the survey, 68.7% of these companies oppose platform regulations, indicating that the legislative rationale to prevent damage to SMEs through platform regulations does not hold.
Finally, Kim Ji-hoon, senior specialist at the law firm Sejong, added, "If you cannot encompass the numerous layers within platforms, policy tools need to be refined," and warned, "Once a regulatory nail is hammered in, it is impossible to reverse."
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