South Korea regulator seeks to defuse crackdown concerns

Regulators will impose only the minimum necessary regulations and intervene solely where it is imperative to do so, said Joh Sung-wook, chairperson of the Korea Fair Trade Commission

South Korea’s powerful antitrust regulator sought to defuse fears of a sweeping tech crackdown as it takes steps to rein in the influence of its fastest-growing online platforms.

Regulators will impose only the minimum necessary regulations and intervene solely where it is imperative to do so, Joh Sung-wook, chairperson of the Korea Fair Trade Commission, told Bloomberg Television in Seoul. The agency’s priority is to prevent companies with dominant market power from abusing it and hurting competition, she added.

Internet titans Naver Corp. and Kakao Corp. shed more than US$10 billion of market value in a single day last month, as worries of a Chinese-style crackdown on their lucrative operations grow ahead of presidential elections next year. One lawmaker dubbed Kakao “a symbol of greed,” echoing growing public sentiment that internet giants are widening the country’s socioeconomic divide by encroaching into areas traditionally the domain of small businesses, such as food delivery and taxis.

Korea wants a true, fair, transparent trade system and ecosystem where big companies and new entrants can grow and innovate together, Joh said. That will ultimately benefit consumers and the industry as a whole, including big players like Kakao. Trust us. We are here to help you.

Internet firms boomed during the pandemic, but their growth also made them the prime target of government scrutiny and criticism. The fear is that regulators in Seoul are taking a page from Beijing, which has launched a campaign to tighten oversight of data, online commerce and even after-school tutoring, to devastating effect. Kakao’s founder briefly became the country’s wealthiest person just as his company and its industry took over as a more pressing regulatory concern than the family-run conglomerates that traditionally produce Korea’s billionaires and monopolies.

The country’s stepped-up enforcement has already led to delays in the initial public offerings (IPO) of Krafton Inc. and Kakao Pay, after regulators questioned their valuations. Financial overseers have imposed new restrictions on fintech platform operators, who now must have a formal registration before selling investment comparison services. Dominant e-tailer Coupang Inc. was fined 3.3 billion won (US$2.8 million) by Joh’s agency in August over allegations of unfair trading practices. In response to the heightening scrutiny, Kakao announced it’ll exit some businesses such as hairdressing reservations and salad deliveries.

Korea has shown itself willing to take on the biggest companies, passing a law in September that mandated mobile duopoly Apple Inc. and Alphabet Inc.’s Google must open their mobile app stores to allow alternative payment methods. But Joh said her agency would step in only to curb market abuses, which have been on the rise.

As platform companies grow big, some of them become gatekeeping monopolies and exploit that power, exerting a dual position as a judge and a player in the market, she said. Individual merchants cannot survive without online platforms. The balance of power has broken.

The antitrust watchdog is investigating additional cases related to alleged anti-competitive practices by Google in its handling of payments and digital ads. A probe related to allegations the U.S. tech giant hampered developers from releasing applications on other app stores has been completed and the deliberation process is about to commence, Joh said.

We are currently looking into multiple global and local cases of big online platforms, she said. We don’t discriminate between domestic or foreign firms. We have fair standards for all who run a business in Korea.