As the size and social influence of online platforms and content provision businesses grow, various regulatory bills are being proposed and government authorities are accelerating discussions on establishing relevant policies.

With regard to online platforms, a law prescribing prohibited acts of app market service providers, namely the “Act on Restriction of In-App Payment,” has passed the plenary session of the National Assembly, and the Korea Communications Commission (the “KCC”) has formed the Fourth Internet Coexistence and Development Committee to discuss policies for the coexistence and development of the internet ecosystem, including online platforms, and user protection.  With regard to content provision business, bills related to mandatory payment of network usage fees by value-added telecommunications service providers are under discussion.

Key Details of Proposed Amendment to Telecommunications Business Act Related to In-App Payment and Status of the Bill

On August 31, 2021, the National Assembly passed the proposed partial amendment to the Telecommunications Business Act (the “Proposed Amendment”), which primarily regulates app market operators.  The Proposed Amendment came into effect on September 14, 2021 (Article 22-9 and 92 of the Proposed Amendment, which concern the obligations of and inspections on app market operators, and corrective orders, etc., respectively, will take effect six months later).

Notably, the Proposed Amendment introduces the following acts, among others, as prohibited acts: (i) an act of forcing certain payment methods to providers of mobile content, etc. or hindering them from advertising other payment methods by unfairly using the app market service provider’s superior bargaining position (Article 50 (1) 9), (ii) an act of unfairly delaying content review (Article 50 (1) 11), and (iii) an act of unfairly deleting content (Article 50 (1) 12).  In addition, the Proposed Amendment allows the Minister of Science and ICT or the KCC to conduct an investigation on the condition of app markets and refer various user disputes occurring in app markets to the Telecommunications Dispute Resolution Committee for resolution.

For reference, during its review of the Proposed Amendment, the Legislation and Judiciary Committee deleted the prohibitions on (i) an act of unfairly forcing or inducing providers of mobile content, etc. not to register mobile content in other app markets (Article 50 (1) 10) and (ii) an act of unfairly imposing discriminatory conditions or restrictions on providers of mobile content, etc. (Article 50 (1) 13).  Both prohibitions were initially included in the Proposed Amendment as proposed and resolved by the Science, ICT, Broadcasting, and Communications Committee, but the Legislation and Judiciary Committee determined to further review these two provisions later on.

Updates on Establishment of Fourth Internet Coexistence and Development Committee

On June 30, 2021, the KCC formed the Fourth Internet Coexistence and Development Committee (the “Committee”) to discuss strategies for the coexistence and development of the internet ecosystem and ways to create an environment for protecting users.  The Committee is comprised of a total of 33 members, including experts of various fields, domestic and foreign service providers, consumers, and civic organizations, and professor Jeong il Choi (School of Business Administration, Soongsil University) has been appointed as the Chairman.

The Committee plans to discuss major policy issues for each group of the ecosystem (platforms, services/applications and network infrastructure), including the definition and types of online platforms, fair competition for online platforms, strengthening of the digital service user protection system, and establishment of a reasonable network use environment.

The Chairman of the KCC has declared that the KCC will prepare effective policies for the coexistence and development of the internet ecosystem and user protection based on the discussions that will take place within the Committee.  The Committee, which will be operated through the end of this year, must submit a report on the result of the discussions to the KCC.

Key Details of Proposed Amendment to Telecommunications Business Act Related to Network Usage Fees and Status of the Bill

On July 15, 2021, Youngshik Kim and ten other National Assembly members proposed a partial amendment to the Telecommunications Business Act that prohibits a value-added telecommunications service provider from failing to pay usage fees based on the network composition and traffic volume necessary for providing internet connection services, despite being provided with internet connection services through facility-based telecommunications service providers’ networks.  The proposal is currently pending review at the Science, ICT, Broadcasting, and Communications Committee. The determination of the requirements for the value-added telecommunications service providers obliged to pay usage fees and methods for calculating fair usage fees is delegated to the Presidential Decree, and the requirements are yet to be discussed.

Implications

As the passage of the Proposed Amendment, which regulates app market operators, by the plenary session of the National Assembly is expected to have a significant impact on the relevant service providers, it will be necessary to thoroughly review the Proposed Amendment and prepare for any necessary action to address the changes to take effect.  Meanwhile, as for the bills currently under the legislative process, since it is possible that they will not be passed or will be further amended depending on public opinions and circumstances of relevant ministries and industries, monitoring of further developments will be necessary.  In addition, since the Committee’s discussions are highly likely to be reflected in major policies on the KCC’s duties, it would be prudent to pay continuous attention thereto as well.