According to current laws, Internet companies in South Korea are classified as value added common carriers doing business by borrowing telecommunication line facilities from common carriers and subject to no extra regulation. The same is applied to Naver and Kakao as well as Google and Facebook.
Under the circumstances, bills are being proposed to incorporate such value added common carriers into the Telecommunications Business Act. This is because boundaries between industries are disappearing with the evolution of the Internet, media and telecom industries, platform-centered ecosystems are being formed one after another, and more and more people are claiming that the same regulations should be applied without exceptions.
Such bills have been proposed by People’s Party lawmaker Oh Se-jeong and Liberty Korea Party lawmaker Kim Seong-tae. The ruling Minjoo Party lawmaker Shin Gyeong-min is about to propose a similar amendment to the Telecommunications Business Act, too.
The first bill focuses on mandatory data submission so that the government can look into competition situations in various markets such as portal, app store and SNS. The second bill is to impose the duty and make major Internet companies pay for the Communications Development Fund at the same time. The third bill includes the imposition of the duty along with a duty to protect users and a duty to inform video content users of the fact that the ads they watch before playing back their content can consume mobile data.
Although some point out these attempts may be in violation of the KORUS FTA, the consensus is that each of the attempts is not problematic unless it targets a certain company by, for example, being given the name of Google Act or the like. According to the Annex on Telecommunications of the KORUS FTA, regulations applied to value added common carriers should be transparent and rational.
“The United States is currently looking to change its privacy protection rules with regard to platform businesses, Germany is currently running a market monitoring organization in order to prepare platform-related laws and rules, and the South Korean lawmakers’ bills do not violate the KORUS FTA as I see it,” said Shin Min-soo, professor of business administration at Hanyang University.
In the meantime, some in the industry are saying that those bills may ultimately hinder the innovation of the Internet industry by strengthening the regulations on Internet companies to the same level of those on telecom operators although the bills have been derived from the recognition that foreign as well as local Internet companies in South Korea should fulfill their social responsibilities.
“More regulations based on the revision of the Telecommunications Business Act is no solution to the discrimination issue in the industry,” said Choi Seong-jin, Secretary General of the Korea Internet Corporations Association, continuing, “In this context, regulations regarding personal information protection and those applied to juveniles, to which foreign Internet companies are not subject now, need to be adjusted or altered.”