Korea's proposal to rein in online platforms sparks tension in U.S. trade negotiations

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Korea's proposal to rein in online platforms sparks tension in U.S. trade negotiations

Published: 18 Jul. 2025, 14:13 Updated: 21 Jul. 2025, 11:11

Audio report: written by reporters, read by AI

The Google logo is seen at a company research facility in Mountain View, California, on May 13. [REUTERS/YONHAP]

Washington is pushing back hard against Seoul’s plan to rein in monopolistic online platforms, turning Korea’s proposed so-called Online Platform Fair Act Law into a flashpoint in the countries’ upcoming trade negotiations.

“The United States is raising the strongest objections to the Online Platform Fair Act Law, even more than its push for the opening of Korea’s agricultural and livestock markets such as beef. It has become the biggest challenge in this round of negotiations,” a senior Korean government official told the JoongAng Ilbo in an exclusive interview on July 17.

“The United States is taking a tough stance against the regulation of its Big Tech firms. Just look at Canada — it dropped its digital services tax at the last moment,” the official added.

Washington is understood to view the bill as a nontariff barrier that must be eliminated and is strongly pressuring Seoul to halt its legislative efforts.

The proposed legislation, led by the ruling Democratic Party (DP), would designate large online platforms as market-dominant operators, giving the Fair Trade Commission (FTC) legal grounds to regulate them. It includes two core bills: the Act on Monopoly Regulation and Fair Trade in Online Platforms, which would predesignate major platform operators and prohibit practices such as tying, and the Fair Online Platform Intermediary Transactions Act, which proposes a commission cap and preferential rates for small merchants.

Crucially, U.S. tech giants such as Google and Apple — both operating in Korea — fall within the law’s regulatory scope.

“Big Tech’s lobbying power in Washington appears enormous. Conversations about Korea in D.C. these days mostly revolve around the Online Platform Fair Act Law,” a diplomatic source told the JoongAng Ilbo.

The Coupang logo is seen in this illustration taken Feb. 11. [REUTERS/YONHAP]

Earlier this month, 43 Republican lawmakers sent a letter to U.S. Trade Representative Jamieson Greer, Treasury Secretary Scott Bessent and Secretary of Commerce Howard Lutnick as Korea’s trade delegation visited Washington.

“One barrier that we urge you to address in any negotiations is proposed legislation advanced by the Korea Fair Trade Commission and embraced by the new Lee Jae Myung government, which disproportionately targets U.S. digital companies for heightened regulatory requirements,” they wrote.

“This legislation would also advance the interests of the Chinese Communist Party by disproportionately targeting American companies while exempting major Chinese digital giants like ByteDance, Alibaba and Temu,” the letter added.

Washington has adopted a hard-line approach not only toward Korea but also toward Canada and the European Union over similar digital regulations. Canada’s federal government, for example, withdrew its planned digital services tax just before its scheduled implementation on June 30.

In response, Korean trade officials are considering their next steps. The Ministry of Trade, Industry and Energy recently urged the DP to tread carefully with the bill.

“We are working closely with the National Assembly and relevant ministries to secure a negotiating mandate,” said a senior official.

The FTC has suggested narrowing the law’s scope and excluding the transaction act altogether. Instead, it proposed regulating food delivery apps through the Food Service Industry Promotion Act, citing existing public concerns over such services.

However, the DP rejected that approach. “Even if we exclude app markets that might touch on Korea–U.S. trade issues, the law must still cover apps in food delivery, lodging and fashion,” party officials said during a policy consultation with the government.

The Fair Online Platform Intermediary Transactions Act was a major campaign pledge of then-DP leader Lee Jae Myung and is positioned as a measure to protect small businesses. But Korean trade officials warn it could still affect U.S. firms like Google and Coupang.

Trade Minister Yeo Han-koo speaks to reporters at Incheon International Airport after returning from Washington on July 10. [NEWS1]

Some trade watchers say Korea should not passively accept U.S. demands but instead use the issue as leverage in tariff negotiations.

“We must protect our interests but also remain flexible when it comes to institutional reform, competitiveness and consumer welfare,” said Trade Minister Yeo Han-koo. “Crafting a balanced package is what matters most.”

“Pursuing the Online Platform Fair Act Law during sensitive tariff negotiations could unnecessarily provoke the United States,” said Heo Yoon, a professor at Sogang University’s Graduate School of International Studies. “We need a thorough cost-benefit analysis comparing the social benefits of the law and the impact of possible tariff cuts,” he said.

“This negotiation touches not just on tariffs, but also defense spending, investment, market access, and digital regulation. It goes beyond the scope of the Trade Ministry alone," Heo added. “The presidential office and the prime minister’s secretariat must take an active role in coordinating the differences."

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM WON [[email protected]]