Korean firms warn of uneven rules as Seoul softens platform reform

South Korea is scaling back its online platform reform plan, as geopolitical tensions surrounding global tech regulation intensify, with recent warnings from US President Donald Trump sparking caution in Seoul’s approach.

According to industry sources Thursday, the ruling Democratic Party of Korea is reconsidering its legislative strategy on digital platforms. During a policy workshop on Aug. 28, party officials reportedly discussed shelving the broad proposed Online Platform Act in favor of a narrower bill focused specifically on domestic food delivery apps.

The pivot comes in response to growing international pressure. On Aug. 25, Trump posted a strongly worded message on his Truth Social platform, vowing to “stand up to countries that attack our incredible American tech companies” and threatening retaliatory tariffs against nations that implement digital taxes or platform regulations.

While the comment was widely seen as a jab at the European Union, the ripple were felt across Asia.

Korean civic group People’s Solidarity for Participatory Democracy quickly denounced the move, staging a protest Monday outside the presidential office in Yongsan, central Seoul. The group accused the Democratic Party of betraying its public commitments and retreating under foreign pressure.

The Online Platform Act, originally introduced to curb the unchecked influence of dominant tech platforms, was one of President Lee Jae Myung’s key campaign pledges.

It aimed to protect a wide spectrum of users — from consumers and small businesses to gig workers and freelancers — by addressing anticompetitive practices across search engines, online advertising, e-commerce marketplaces and delivery services.

The legislation was expected to headline the July special session of the National Assembly. However, the civic group claims the proposal has since been watered down, replaced by a narrower proposed Fair Transactions in Subcontracting Act, a move seen by critics as a strategic retreat.

Washington had previously raised concerns about Seoul’s direction on digital regulation. In its March National Trade Estimate Report, the Office of the United States Trade Representative called for more transparency in Korea’s platform governance and voiced discomfort with what it viewed as disproportionate regulatory burdens on foreign tech firms.

In this climate, the Korean government has shifted its attention from a comprehensive digital platform framework to a specific vertical: food delivery platforms.

President Lee had promised during his campaign to reduce the financial burden of delivery fees on consumers and merchants. Following this direction, the Ministry of SMEs and Startups has confirmed its intent to regulate domestic delivery apps more tightly.

“Delivery apps’ opaque advertising models and excessive commissions are problematic,” said SME Minister Han Sung-sook during a press briefing commemorating her first 30 days in office. “We intend to launch a full investigation into the fee structure and payment practices.”

Small merchants have long voiced frustration with the platforms’ high rates. Some say that up to 20 percent of their monthly revenues are consumed by delivery-related fees and paid ad placements.

However, sources say that targeting only Korean firms, while leaving international tech giants unregulated, risks creating an uneven playing field.

“The delivery market is extremely competitive and requires continuous investment in research and development and marketing,” commented an industry source, who requested anonymity. “Meanwhile, foreign tech giants like Google and Apple charge up to 30 percent commissions on app store transactions and face little scrutiny. It is inherently unfair to single out domestic players.”

While domestic platforms now face possible new regulations, the global behemoths that dominate Korea’s digital economy — such as Google in search and advertising, Apple in app distribution and Amazon in e-commerce — remain untouched by legislative action.

This regulatory imbalance has sparked criticism within the industry.

“If the government is serious about fairness, it must address the growing disparity between local companies and foreign tech titans,” said another industry source. “Protecting global platforms at the expense of domestic firms will ultimately undermine Korea’s digital competitiveness.”

Meanwhile, Rep. Lee Yang-soo of the opposition People Power Party revealed Wednesday that Ju Biung-ghi, the nominee for chair of the Fair Trade Commission, has pledged to bolster the bargaining power of small and medium-sized enterprises and tenant merchants.

In a written response submitted to the National Assembly's Political Affairs Committee as part of his confirmation hearing process, Ju stated, “I will work to strengthen the negotiation power of economically vulnerable groups, including SMEs, small business owners and store-in-store retailers.”

Addressing concerns that Korea’s move to regulate online platform monopolies could spark trade tensions with the United States, Ju emphasized that the law would apply equally to all players regardless of nationality.