South Korea’s proposed Online Platform Regulation Act has taken multiple turns amid political upheaval, pressure from the United States, and a fiercely competitive domestic tech market. Hwang Lee explores how global geopolitics, strong domestic platforms, and the “Brussels Effect” are reshaping the country’s approach to digital regulation.
SSouth Korea’s proposed Online Platform Regulation Act (The Act) has been the subject of much debate and undergone numerous changes since its initial proposal in 2020. Its future is now even more unclear as the Trump administration criticizes South Korea’s legislative efforts to regulate Big Tech.
Importance of the Online Platform Regulation Act
There are several reasons why the Act has become an issue of public interest in South Korea. First, the digital economy has become increasingly important to the Korean economy. According to consultancy firm Forrester’s 2024 study, Korea’s digital economy is expected to account for 31% of its GDP by 2028, ranking sixth in the world in absolute size. Recent government statistics indicate that online sales account for more than half of all retail sales in 2024, and annual sales growth was 15% online compared to only 2% offline.
Second, although the growth rate of the Korean economy overall is projected to decline in the future, digital platforms could provide the most powerful means to overcome these growth limitations.
Third, proponents of the Act claim regulation is necessary as platforms grow in size and become more influential. In 2024, the revenue of Naver, the company operating Korea’s most powerful search engine, exceeded KRW 10 trillion (USD 6.8 billion). Kakao, the company behind Korea’s superapp, KakaoTalk, had 115 subsidiaries as of May 2025. The scale of these Korean platforms is often compared to the chaebols, South Korea’s family-controlled industrial conglomerates, which have been subject to various ex ante regulations to prevent competitive harms from arising.
Fourth, there are a large number of small and medium-sized enterprises (SMEs), especially in the retail sector. Many complain that big platforms exploit them in various ways. These often include charging excessive fees and taking away business opportunities. Protection of SMEs is not just a legal issue but also an important social concern in South Korea, since they are an important source of employment. As of 2023, SMEs account for 99% of all enterprises and 81% of employment in Korea.
Fifth, many consumers also recognize that the proliferation of dominant platforms brings as many problems as benefits, such as higher prices and unfair competition. “Money spent on food delivery keeps increasing,” wrote Korea JoongAng Daily, “as do complaints.” The growing dissatisfaction of both SMEs and consumers is an important political issue in almost all elections.
Driving forces behind the Act
The Korea Fair Trade Commission (KFTC) is tasked with regulating platforms’ abuse of market dominance and superior bargaining positions. Since Korean platforms began to grow rapidly in the early 2000s, there has been a rising demand for greater antitrust enforcement, including the protection of SMEs. The KFTC has enforced competition law enthusiastically for the past decades, dealing with more than two thousand cases and imposing more than KRW 200 billion (USD 140 million) every year. However, there were growing complaints that called for stronger regulation given the limitations of current law to adapt to the digital economy. These complaints argued that existing regulations are not fairly equipped with tools to control unfair exploitations by monopolistic digital platforms over SMEs, e.g. monopolizing local distribution channels, excessive commission fees, etc.
South Korea is hardly the only country legislating new competition policies to address the digital economy. The European Union trailblazed in this regard with the Digital Services Act and the Digital Markets Act. Several other countries have adopted their own ex-ante regulatory frameworks to address competitive concerns from Big Tech. The work of these countries has provided South Korea with models of digital regulation so that it does not have to start from scratch. It also compels South Korea to pass its own digital regulation lest it fall behind.
Frequent shifts in regulatory strategy
The KFTC first proposed a version of the Act in 2020. The proposal focused on the unfair transactions in vertical relationship between the platforms and SME suppliers and targeted obligations to issue copies of contracts, specification of detailed types of abuse of superior bargaining position, and strengthening sanctions to protect the rights of SMEs and consumers on large platforms. However, the Act faced strong opposition from both academia and industry and therefore was not enacted. In fact, opponents believed that existing competition law was enough to address concerns within local digital platform markets. They argued that, to keep up with the growth of online platforms, it is important to strengthen the KFTC’s enforcement capacity by increasing its human and financial resources.
In 2022, the newly elected conservative government initially supported platform self-regulation and hence put the Act on hold. Nevertheless, in October 2022, a fire at Kakao Messenger’s data center prompted new legislation amidst growing public criticism of monopolistic platforms. The government saw the fire as the result of the firm’s idleness, exacerbated by the monopolistic market structure. The new legislative proposal, unlike the previous one, designated platforms above a certain size as subject to the regulation of certain types of exclusionary behavior such as self-preferencing and multi-homing. This proposal was still strongly opposed by academia, industry and the U.S. government for the same reasons as in 2020.
In September 2024, the KFTC adopted a new approach, which entailed amending the existing competition law to regulate platforms without enacting an altogether new law. The proposed amendment did not specify in advance which platforms would be subject to the new regulation, and it significantly reduced the scope of prohibited conduct while allowing platforms procedural opportunities to justify their behavior by showing efficiencies and other redeeming virtues. This approach was seen as a compromise between the existing competition law (which was deemed insufficient) and the Digital Markets Act (which was deemed too onerous).
Although the KFTC has watered down its proposal since 2020, the National Assembly, South Korea’s legislative body, has gone the opposite direction. The progressive opposition party has consistently advocated for the enactment of a special competition law in the National Assembly. At the end of 2024, 17 bills promoting ex-ante regulation were pending in the National Assembly. Due to the conflict between the National Assembly and the KFTC, legislative action remains delayed.
Dynamic competition in the platform market
The KFTC’s September 2024 proposal to amend existing law rather than create new regulations is often viewed as a compromise between the global regulatory influence of the European Union—called the Brussels Effect—and the nature of domestic competition. One of the reasons why Korean academia and industry have opposed new laws governing Korea’s digital platforms is that the country’s platform market structure and competition dynamics are fundamentally different from Europe’s and do not require special ex-ante regulation, meaning that Korea is not a proper place for an application of the EU’s Digital Market Act. In fact, the platform market in Korea is highly competitive in many areas. For example, in the e-commerce market, online platforms compete not only among themselves, but also with traditional offline stores. Both of the competitive fronts are fierce. In addition, Chinese platforms, including AliExpress and Temu, are also rapidly penetrating the Korean e-commerce market. The internet search market in Korea has long been dominated by Naver, but Google’s market share approached 40% in 2024 as younger generations increasingly rely on mobile phones. In the face of such fierce competition, Korean platforms are realizing the limitations of the narrow domestic market and are seeking to expand their operations globally.
Furthermore, unlike in the EU, domestic companies still lead most digital markets in Korea, such as internet search, retail, and food delivery, despite increasing competition from American and Chinese platforms. The market share of foreign Big Tech in most industries is still small compared to other countries. For example, according to statistics from the Korean government, Naver accounted for 52.7% of the internet search engine market, Baemin 64.9% of the food delivery, and Coupang 38.6% of the e-commerce market by the end of 2023.
Due to this unique market structure and fierce global competition, there are concerns that the introduction of additional ex ante platform regulations will distort the competitive digital landscape and disproportionately harm Korean platforms rather than foreign platforms. Further, the KFTC already strictly regulates digital platforms under the rules of traditional competition law as well as unfair trade practices whose regulatory scope is much wider. Thus, regulation of platforms would be better achieved through continued vigorous enforcement of the existing competition law, coupled with an increase in staff and budget if necessary.
Criticism from the Trump administration
Jamieson Greer, the U.S. Trade Representative under President Donald Trump, publicly criticized South Korea’s proposed Act on February 6. He argued that it discriminates against U.S. platforms and that foreign governments should not regulate U.S. companies. While Greer did not specify what part of the legislative proposal appears discriminatory, the argument contrasts with Korean platforms’ concerns about the possible impact of “reverse discrimination” onto themselves.
In response, KFTC Chairman Han Ki-Jeong emphasized that the proposed law has a more limited regulatory scope and fewer sanctions than the Digital Markets Act and does not discriminate against foreign platforms. At the same time, he noted that the KFTC would “respond appropriately to prevent the Bill from becoming a trade issue from a national interest perspective.”
Most recently, in July the U.S. House Judiciary Committee sent a letter to the Korean government expressing concerns of potential discrimination. In response, the KFTC vowed fair treatment for U.S. platforms. Nonetheless, Trump warned of substantial additional tariffs against countries digitally regulating U.S. platforms on August 25. Competition experts and policymakers interpreted the warning to include Korea’s proposed Platform Regulation Act.
Future of the proposed Act
Proposals for platform regulation in Korea have been controversial for many years, and now the Trump administration has become the defining factor in this regard. Given the Trump administration’s significant influence over Korea’s economic policy, the Korean government is expected to consider the proposal more cautiously (i.e., noncommittally) in the future.
While the new President Lee Jae Myung, who was sworn in on June 4, 2025, promised to introduce the Online Platform Regulation Act during the presidential election campaign, it is to be seen whether he will keep pursuing the direction. The new government seems to negotiate with the U.S. government to minimize the possibility of trade friction. The future and content of the Act will be determined by the result of the trade negotiation as well as domestic discussion. In any case, the overall goal will be to promote vigorous market competition and the growth of Korea’s digital economy and platforms.
Author Disclosure: The author reports no conflicts of interest. You can read our disclosure policy here.
Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
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