Curbing the tyranny and enlivening the habitat
Published: 27 Dec. 2023, 20:14
Kim Junic
The author is a professor at Konkuk University School of Business.
We once hoped that the platform economy would feed a benign cycle of innovation. But today, that cycle is under the rule of a few Big Tech companies who use their lofty capital and market influence to repress smaller competitors.
Their monopoly is undermining the market’s diversity and progress. It impairs the basic principle of platforms to achieve shared growth. Small and fledgling companies may tap the market with new ideas and technologies, but their attempts can flounder under a monopolistic environment. Such winner-take-all bias can restrict the diversity of the market and eventually restrict consumers’ choices and hurt industrial growth. As dominant platforms are causing problems for the industry rather than fueling its innovation, corrective action is required.
We cannot deny that platform operators have brought positive change to society. They have certainly contributed to the development of an innovative ecosystem. Our lives are greatly different as a result. But the oversized dominance of a few big players is harmful to progress because they make it harder to introduce new technologies to broaden the market.
The Fair Trade Commission (FTC) is working on the Platform Fair Competition Promotion Act. Under the antitrust law, dominant platform operators will be designated and subject to regulatory supervision so that they do not abuse their power.
Dominant operators in respective markets will be taxonomized by revenue, user count and market share. The bill will restrict or ban those big players from offering preferential treatment to their umbrella businesses and restricting multi-homing, the practice of simultaneously connecting to multiple platforms. The goal, according to the FTC, is to ensure fair competition in the market. By restricting the excessive influence of dominant players, the government hopes to build an environment where diverse businesses can compete freely.
Restricting market dominance is not synonymous with hampering growth. When fair play rules are imposed on the field, companies will vie with creative solutions, and consumers will have more choice.
But regulating the platform industry requires a very careful approach. As internet scholars have argued, it must encourage innovation. Intense pre-business scrutiny, for example, could damage the platform industry in Korea, which has highly competent operators, unlike the European Union. The U.S. Congress, meanwhile, killed many bills aimed to restrict platforms this year. Bills like the Ending Platform Monopolies Act, the American Innovation and Choice Online Act, and the Platform Competition and Opportunity Act were all shot down because U.S. politicians feared their ominous ramifications for consumers and the industry.
The U.S. approach should be a lesson for Korea, which is home to highly competitive online players. Predatory anti-innovation practices should be regulated. But regulations should not repress the platform economy. Regulations must be strictly limited to containing the unfair practices of big players in the market — and breeding a healthy environment for innovation.
Translation by the Korea JoongAng Daily staff.
with the Korea JoongAng Daily
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