Refer Report

According to the application standards announced by the Fair Trade Commission on the 9th when it announced a policy to revise the Fair Trade Act to regulate monopoly platforms, ‘Coupang’ and ‘Baedal Minjok’ (hereinafter referred to as Baemin) are excluded from the scope of regulation. Coupang is expanding its influence to Coupang Eats (delivery) and Coupang Play (video service) with Rocket Delivery at the forefront, and Baemin, which accounts for about 60% of the delivery app market, has also established itself as an essential app for the people. These two companies are representative examples of the influence of platform companies. Why did the Fair Trade Commission exclude the two companies from regulation?

■ The true meaning is to keep global big tech in check.

In an interview with CBS radio’s ‘Kim Hyun-jung’s News Show’ on the 11th, Fair Trade Commission Chairman Han Ki-jeong said, “Approximately four to five platforms will be subject to discipline.” The platform companies he mentioned are believed to be Google (video, app market, operating system), Apple (operating system), Naver (search), and Kakao (messenger). Coupang falls short of the standards set by the Fair Trade Commission for market share (more than 60% for one business or more than 85% for three businesses), and Baemin meets the market share requirements but falls under an exception condition (less than 4 trillion won in sales).

The Fair Trade Commission argues that as it is applying new strong regulations, it must select targets based on strict standards. This is a reasonable explanation, considering that the burden of proof is imposed on the regulated platform and the penalty rate is increased from 6% to 8% of related sales. However, underneath it all lies the fear of ‘global big tech’.

Summarizing what high-ranking officials at the Fair Trade Commission said on the 30th, the focus of monopoly platform regulation is to block the expansion of the dominance of ‘big tech dinosaurs’. A high-ranking Fair Trade Commission official said, “The purpose is to prevent aliens (global big tech platforms) from invading and encroaching on our market. “In the process, some ‘alley leaders’ (Naver, Kakao) may also be subject to regulation,” he said. Another key official also said, “Regulation of monopoly platforms is not a system with the scale of Coupang and Baemin in mind.”

The YouTube Music case supports these concerns. The local music streaming app ‘Melon’ easily lost its first place to latecomer YouTube Music. This is because Google is selling YouTube Music subscriptions bundled with YouTube’s premium plan. This is the background to concerns that this may repeat itself in the search (Naver) and messenger (Kakao) markets where native platforms are holding up well. This is also the reason why the former Secretary-General of the Fair Trade Commission (currently the Director-General of the Investigation Department) said in January, “If regulation of monopoly platforms is delayed, we will become a sinner of history.”

■ The influence of the alley leader cannot be ignored

However, there are many voices criticizing the Fair Trade Commission’s decision. This is because, regardless of whether it is an alien (Big Tech) or an alley leader, the harmful effects of monopoly abuse are the same. Both Coupang and Baemin, which were excluded from actual sanctions, are being investigated by the Fair Trade Commission on charges of four major anti-competitive practices (primary treatment, tying, multi-homing restrictions, and most favorable treatment demands) that the Fair Trade Commission is trying to quickly regulate by applying to monopoly platforms. The Fair Trade Commission is looking into whether Coupang’s bundled delivery and video services and Baemin’s preferential treatment of self-delivery constitute anti-competitive practices prohibited by the Fair Trade Act.

Kwon Ho-hyeon, a lawyer at the Economic and Financial Center of People’s Solidarity for Participatory Democracy, said, “Due to the nature of the platform that maximizes influence in the process of connecting buyers and sellers, it is possible to commit anti-competitive acts even if it does not meet the monopoly standard (50% share) of traditional industries such as manufacturing and service industries. “The purpose of regulating monopoly platforms is to expand the scope of regulation,” he said. “The standards established by the Fair Trade Commission completely run counter to this purpose.”

Reporter Ahn Tae-ho eco@hani.co.kr

Source: Korean