Avoided

March 9 (Asia Today) — Guest commentary contributed to Asia Today by Park Ki-soon, Professor, Graduate School of Chinese Studies, Sungkyunkwan University.

Debate over platform regulation has been intensifying in South Korea. A prominent example is the proposed Online Platform Act (OPA). The bill includes provisions such as commission caps, a prior designation system, collective bargaining rights and class-action lawsuits – all framed as measures to protect merchants and ensure fair competition.

The intention itself is not necessarily misguided. Information asymmetry and unequal bargaining power do exist within the platform ecosystem. However, before deciding what to regulate, policymakers must carefully consider how regulation should be implemented. Good intentions do not always produce good outcomes.

The European Union (EU) enacted the Digital Markets Act (DMA) in 2022 and designated six companies – including Alphabet, Apple and Meta – as “gatekeepers,” subjecting them to strict ex-ante regulations. The law was introduced with the stated goal of promoting competition and protecting consumers.

Yet less than three years later, research is suggesting outcomes quite different from what policymakers expected.

A study examining 3,500 consumers in seven Central and Eastern European countries found that user behavior on Google and Facebook remained largely unchanged after the DMA took effect. Competition did not increase, while the complexity of online tasks rose by 39%.

Another study analyzing 4.1 million apps in the Google Play Store estimated that after the General Data Protection Regulation (GDPR) was implemented, one-third of all apps disappeared, the number of new apps was cut in half and consumer surplus declined by roughly one-third. Venture investment and startup formation also slowed significantly.

Commission caps have produced similarly disappointing results. After Apple lowered App Store fees in the EU, only 9% of apps reduced prices for consumers. Meanwhile, more than 86% of the fee savings flowed to developers outside the EU.

Rather than effectively restraining large corporations, platform regulations have often increased barriers to entry for smaller firms. In other words, regulations intended to curb market dominance may ironically end up protecting incumbent giants by making it harder for new competitors to enter.

South Korea faces an even more delicate situation than the EU.

In the search engine market, Naver and Google dominate, while KakaoTalk has become the country’s national messaging platform. Korean cultural content spreads globally through platforms such as YouTube and Netflix, and cosmetics exports reached $11.4 billion in 2025.

Except for China – which restricts foreign platforms – South Korea is often considered the world’s most platform-independent digital ecosystem. At the same time, this ecosystem is deeply interconnected with global platforms.

Under these circumstances, poorly designed regulations could also affect foreign investment by companies such as Netflix and Amazon Web Services (AWS) in Korea.

There are also diplomatic risks. The United States has expressed concern that the OPA’s prior designation system could disproportionately target American companies and potentially violate the non-discrimination principle under the Korea-U.S. Free Trade Agreement.

Washington has already criticized the EU’s DMA as a non-tariff barrier targeting U.S. Big Tech and has hinted at possible retaliatory measures. A similar dispute could arise if Korea adopts comparable regulatory frameworks.

Another concern is that excessive regulation could inadvertently benefit Chinese platforms.

Chinese e-commerce services such as AliExpress and Temu are already rapidly expanding their presence in the Korean shopping app market. If both domestic and global platforms are tightly constrained while Chinese platforms remain largely unaffected, the result would be the exact opposite of what regulators intend.

South Korea has previously fallen behind China in areas such as online banking due to a “regulate first, innovate later” approach. That experience should serve as a cautionary lesson.

Platform policy must be approached with prudence. Regulations designed without sufficient consideration of market dynamics risk doing more harm than good – weakening innovation, discouraging investment and ultimately undermining the very ecosystem they aim to protect.

— Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260309010002423