Lee Jaemyung's 'Online Platform Fairness Act' Incoming... Broader Regulatory Scope Likely to Avoid Trade Friction [New Administration Policy Agenda]

From Commission Caps to Pre-Designation System
A Comprehensive Package for Preventing Platform Abuse and Protecting Consumers

Under the Lee Jaemyung administration, which has decided to pursue the enactment of the Online Platform Fairness Act, the scope and intensity of platform regulation are expected to become even stronger. The Online Platform Fairness Act, which focuses on protecting small business owners and partner companies and on preemptive regulation of dominant platform operators, and the amendment to the E-Commerce Act, which centers on consumer protection, will be promoted as a single package. There are also discussions about splitting the issues of monopoly and power imbalance into separate legislative initiatives. Concerns about trade pressure from the Donald Trump administration are being met with the view that expanding the scope of regulation could provide more room for negotiation.

Yonhap News Agency

According to the Democratic Party of Korea and relevant ministries on June 5, the Lee Jaemyung administration is reviewing this direction for the enactment of the Online Platform Fairness Act. The act is intended to swiftly address recurring unfair practices in the platform ecosystem and was included in President Lee's campaign pledges. In his pledges, President Lee stated that he would introduce a law to prevent abuses of monopoly power and the negative effects of monopolies by large platforms.

The Online Platform Fairness Act being pursued by the current administration consists of two main pillars: regulations on power imbalance to protect partner companies and small business owners, and preemptive regulation to prevent abuse of dominance by large domestic and global platforms. The regulation of power imbalance focuses on specifying prohibited types of abuse of transactional position (gapjil) by platform companies against partner companies, with rules tailored to the platform industry. While the existing Fair Trade Act allows for sanctions against such abuses, the new law aims to define and address frequent abuses in the platform economy more specifically and swiftly.

A Democratic Party official explained, "It is a basic law that establishes procedures for platform contracts, such as making it mandatory to draft standard contracts," adding, "We will also discuss whether to include measures such as a cap on commission fees within the Online Platform Fairness Act." In its campaign pledges, the Democratic Party had proposed the need for an Online Platform Fairness Act that would prohibit discrimination in platform intermediary commission rates and introduce a cap on such fees, especially in the delivery market. This would set an upper limit on delivery and other fees charged by platform companies to partner businesses.

Preemptive regulation to address monopoly issues by dominant platforms is also a key axis of platform regulation. The core idea is to establish in advance the criteria for platforms with a certain level of market dominance and to regulate their legal violations, thereby accelerating sanctions against unfair practices. Under the previous Yoon Sukyeol administration, the Fair Trade Commission attempted to implement a pre-designation system but faced industry backlash. As a result, it pursued an amendment to the Fair Trade Act that would apply stronger sanctions by retrospectively presuming certain legal violations by platform operators.

The Core of Trump-Era Concerns: 'Only Targeting U.S. Companies'... Room for Easing by Broadening Regulatory Scope

Consumer protection will be addressed separately from the Online Platform Fairness Act. In his campaign pledges, President Lee stated that he would conduct a survey on the collection and use of personal information by platform companies to ensure adequate user protection and strengthen the level of sanctions. A Democratic Party official said, "The basic idea is to address consumer protection through the E-Commerce Act," and added, "The Online Platform Fairness Act could either combine monopoly and power imbalance issues into one or address them separately." He continued, "However, since the bills previously proposed by Democratic Party lawmakers are largely similar, we will negotiate with the People Power Party based on these core elements."

Regarding concerns about trade pressure from the Donald Trump administration during the legislative process for the Online Platform Fairness Act, the government and the ruling party believe that expanding the scope and targets of regulation could create room for negotiation. The analysis is that the United States does not oppose all platform regulation by the Korean government, but is particularly concerned when discriminatory regulations are unilaterally imposed without consultation, targeting only U.S. companies.

Accordingly, if the Online Platform Fairness Act does not limit its regulatory targets to specific U.S. big tech companies but lowers the threshold for regulation to include all large domestic and foreign platforms, it could avoid the perception of being a "law targeting only U.S. companies" and secure international legitimacy. As long as the regulatory structure does not target only certain U.S. companies such as Google or Apple, sufficient coordination with the U.S. side is considered possible. However, a Democratic Party official stated, "We are fully considering the unique characteristics of the Trump administration and will negotiate accordingly," adding, "Since the Online Platform Fairness Act is not an urgent issue that must be pushed forward immediately, we will work closely with the opposition party to address trade friction and related matters."