Korea’s FTC introduces guidelines to prevent monopoly in online platform market

Korea’s FTC introduces guidelines to prevent monopoly in online platform market. [Sources : Naver, Kakao]

South Korea’s major online platform operators Naver Corp. and Kakao Corp. could face sanctions if they force free services to users under a new guideline introduced by government on preventing abuse of power.

Under an inspection guideline presented by the Fair Trade Commission (FTC) on Thursday, online platform operators could face sanctions in the advent of value exchange such as ad profit creation through personal data collection by offering free products and services to users.

The antitrust agency identified four areas the operators may exercise influence on limiting competition - restricting multi-homing, requesting favorable treatments, favoring its own subsidiaries, and offering bundle services.

The FTC will take into consideration the four areas when inspecting not only domestic online platform operators but also foreign players in Korea.

Large platform service providers like Naver and Kakao could face sanctions from the antitrust agency if they force users their free products and services even if they do not occur financial disadvantage to users.

Market insiders noted that platform operators when advancing into the app business engage in bundle sale of products and services, like Naver that launched simple payment system Naver Pay based on its chat app Line.

The FTC, however, will judge unfair business activity after comprehensive review of the level of restraint on competition and efficiency gain impact among others.

The new guideline comes after calls for measures to regulate abuse of power in online and mobile platform industry after nationwide service disruptions at Kakao due to a major data center outage in October last year.