South Korea will introduce regulations targeting large online platform companies to curb their market dominance as well as protect small businesses and consumers from monopolistic practices.

During a cabinet meeting presided over by President Yoon Suk Yeol on Tuesday, Korea Fair Trade Commission Chairman Han Ki-jeong disclosed the government’s proposal to enact legislation to promote fair competition among platforms and establish fair market practices.

The government believes that the current legal framework cannot keep up with the monopolization of the platform market, leading to a plan to introduce new legislation. Under the law proposed by the government, a few key platform companies will be designated as “dominant platform operators” and prohibited from engaging in frequent unfair practices in the platform market.

Referring to the “growing criticism from small business owners and consumers of market-dominant platform giants,” Yoon expressed concerns about the potential loss of choices for small business owners and consumers if the market is dominated by a few key players. He also worried that it would stifle new platform startups as well as dynamic innovation, which would not take hold without a fair market. “Any acts obstructing competition and undermining consumer welfare with their privilege and monopolistic positions cannot be tolerated,” he added.

The proposed legislation aims to pre-designate major platform operators with dominant market power and strengthen monitoring to prevent them abusing their dominant market positions. The “dominant platform operators” will be designated based on comprehensive evaluations of revenue, user numbers, and market share.

The proposed legislation also prohibits malpractices often observed in the platform market, such as self-preferencing or restrictions on multi-homing. Multi-homing restrictions refer to practices that prohibit users of one’s own platform from using competing platforms.

But platform operators that breach the law can still avoid sanctions if they can provide valid reasons for their actions.

By Lee Jin-han, Woo Je-yoon, and Chang Iou-chung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]