[Inside Chodong] What K-Platforms Need to Achieve Global Competitiveness

Kim Cheol-hyun, Deputy Director of the Bio Startup and Venture Department

"The scale of Korea in the global platform economy is still minimal, and even the representative domestic platforms cannot be compared to big tech companies. Considering the high growth potential of platforms and their impact on the value-up of the Korean economy, policies to foster platform growth are necessary." This was stated by Professor Kang Hyung-gu of the Finance and Management Department at Hanyang University during the expert forum titled ‘Exploring Next-Generation Unicorns, K-Platforms’ held at the National Assembly Members' Office Building on the 25th. His presentation on ‘The Economic Value of Korean Platforms and Value-Up Strategies’ at the forum cuts through the reality faced by Korea’s platform industry and startup sector. Currently, a borderless war is underway in the platform business. Even without citing YouTube as an example, it is well known that globally competitive platforms can enter our market at any time. Despite this situation, discussions on promotion policies to support the global competitiveness of our platform startups remain insufficient.

The emergence of platforms across various industries coincided with the expansion of internet and smartphone penetration, leading consumers to increasingly utilize online-based services. Since then, platform companies have grown by providing various services online, such as e-commerce and social networking services (SNS). As of last year, among the world’s top 100 unicorns (unlisted companies valued at over 1 trillion KRW), platform startups accounted for 48 companies by number and 53.1% by corporate value. The strategic importance of the platform industry is further highlighted by the rapid development of artificial intelligence (AI) technology. Our experience of AI technology’s utility is also through platforms. Accordingly, the World Economic Forum predicted that the global digital platform revenue scale will approach approximately 60 trillion dollars this year. This is why major countries worldwide are actively working to expand the influence of their domestic platform companies.

However, the current status of our platform industry is widely recognized within the industry as being disconnected from this global competitive environment. Looking at the distribution of unicorn platform startups by country mentioned earlier, the U.S. has 23, China 8, India 6, but Korea only 1. While most unicorns that grew domestically in the past were platform companies, no platform startup with global competitiveness has emerged recently.

The background to this is pointed out as regulation. Currently, nearly 20 bills regulating platforms have been proposed in Korea. These bills contain provisions that strictly regulate platform operators under the pretext of fairness. This contrasts with major countries like the U.S. and the EU, which are introducing strategic regulations to protect their domestic platform industries and curb market encroachment by foreign companies. Even if authorities try to include foreign platforms in the regulatory scope, there are many practical obstacles, raising concerns about reverse discrimination. Regulation is necessary for platforms that have already become large corporations. However, as concerns grow over the deepening market dominance of global platform companies, policy support for K-global platform growth beyond the domestic market is also needed.

The point made by Lee Gi-dae, head of the Startup Alliance Center, is apt. He said, "The platform industry is directly linked to increasing consumer welfare and the sales channels of small and medium enterprises, so every country is eager to nurture its domestic platforms," adding, "Our government should not view platforms only as regulatory targets but recognize them as a core driving force for economic growth and the activation of the digital ecosystem."