Ex Post Sanctions Are More Reasonable Than European-Style Ex Ante Platform Regulation

The bill to regulate online platforms, which was introduced in the National Assembly and even discussed for fast-track designation, was modeled after the European Union’s Digital Markets Act (DMA). Under this approach, companies above a certain size are designated in advance as “dominant platforms,” and practices such as self-preferencing, tying, restrictions on multi-homing, and most-favored-nation requirements are prohibited in principle. However, Korea’s market realities and industrial structure are entirely different, making it inappropriate to apply this framework wholesale.

Although discussions on the Platform Monopoly Regulation Act have temporarily paused in the aftermath of the Korea-U.S. trade negotiations, political interest in regulating online platforms remains strong. Accordingly, the possibility of renewed 추진 remains very real. Since the hasty introduction of ex ante regulation could impose a long-term burden on the industry, more careful review is needed now than ever.

Korea’s platform market is not structured like Europe’s, where U.S. Big Tech dominates. Domestic firms such as Naver, Kakao, and Coupang divide up major services and compete fiercely with one another. In this situation, introducing European-style ex ante regulation could allow foreign companies to slip through the regulatory net while subjecting only domestic firms to stringent rules, resulting in reverse discrimination.

It is also risky to judge a platform’s power simply by market share. Platforms operate in a two-sided market structure, connecting two groups: suppliers (producers) and consumers. In such a structure, platforms may charge low fees on the seller side in order to attract more consumers. Therefore, a high market share does not necessarily mean that a platform has strong market power.

Moreover, the conduct being targeted is not always anticompetitive or harmful to consumers. Self-preferencing can, depending on the circumstances, lower prices and increase consumer benefits, while tying can bundle various services together and provide them more cheaply and conveniently.

There can also be positive effects from a competition standpoint. Self-preferencing and bundled service offerings can create differentiation among platforms, and restrictions on multi-homing or most-favored-nation requirements can, in some cases, promote investment and competition over service quality. If these realities are ignored and such practices are banned across the board by law, competition itself may instead be undermined.

Shifting the burden of proof onto companies is also a serious problem. In principle, the government (the Fair Trade Commission) should be required to prove a company’s anticompetitive conduct, but the ex ante regulatory proposal contains the excessive demand that companies themselves prove the absence of anticompetitive effects. This runs counter to the presumption of innocence and could discourage innovation by pushing firms toward defensive and passive management. If companies must worry that every attempt to introduce a new service or feature could trigger regulation, innovation will ultimately stall and consumer welfare will decline as well.

In the end, the path Korea should choose is not to adopt European-style ex ante regulation as it is. Since systems such as the Monopoly Regulation and Fair Trade Act and the Electronic Commerce Act already exist, it is more reasonable to impose sanctions ex post only when clear problems emerge. Above all, this is the time to establish governance arrangements that allow consumers to participate institutionally in the regulatory design process.

Ho-gyeong Lee, Researcher, Center for Free Enterprise (CFE)

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Original title: 유럽식 플랫폼 사전규제보다 사후 제재 방식이 더 합리적

Author: Ho-gyeong Lee

Date: 2025-09-17

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=28105