The Organization for Economic Cooperation and Development's competition chief, Frederic Jenny, lauded South Korea for challenging Google’s monopoly in the fast-evolving digital market, saying that Korean authorities have sent a lot of signals to the US tech giant and beyond.
“Google (now) understands that Korea is very serious about maintaining competition and not allowing practices that are anti-competitive,” Jenny, the chair of the OECD Competition Committee, told The Korea Herald in a recent interview. “We put a sanction (on Google), and if that doesn't change the culture of those (Big Tech giants), we still have the option of going toward ex-ante regulations. It’ll be in a much worse position if you're a platform.”
Jenny, 79, is also an economics professor at the Ecole Superieure des Sciences Economiques et Commerciales, or ESSEC Business School, in Paris. He has been leading the OECD committee since 1994. He was visiting Seoul last week to attend the Seoul International Competition Forum hosted by the Korea Fair Trade Commission.
In April, Korea’s antitrust watchdog imposed a fine of 42.1 billion won ($32 million) on Google for abusing its market dominance to solidify its No. 1 position in the local mobile gaming app market. Google was found to have pressured domestic game publishers to launch their new games exclusively through its app store, Google Play, prohibiting the publishers from releasing content on other rival app stores for over two years, between June 2016 and April 2018.
When asked about the skepticism over whether the level of the sanction was harsh enough, Jenny said the level itself should not be judged by the fine amount.
“The key to the matter was that the Korean regulator sent a lot of signals to the platform giant on what not to do. Time will tell whether it was sufficient enough for Google to change its practice or not."
The sanction on Google came as the KFTC is ramping up efforts to standardize laws and regulations to guard against anti-competitive activities in the burgeoning digital economy here. The antitrust watchdog, in particular, operates a special task force solely dedicated to monitoring the platform market.
“The Korea Fair Trade Commission is doing exactly the right thing. Korea has had many enforcement cases already and has published a guideline for platforms,” Jenny said.
Korea has bolstered ties with the OECD to better regulate platform operators. They launched a joint venture called the OECD Korea Policy Centre in Seoul back in 2007 -- one of the OECD's three regional branches -- together with those in Budapest and Peru.
Due to the importance of digital markets amid the lack of information, the OECD has formed 30 to 40 panels on digital issues. The organization has made considerable effort to raise awareness among its member nations on the relationship between competition and innovation, but the chair admitted that industrial policies have been often ignored by competition policymakers.
"Industrial policy is done in a way which is not going to lessen competition but in fact going to promote competition. To make competition, authorities understand that there are some circumstances where government intervention may be justified. For this, there needs to be a dialogue between the industrial competition policymakers," he said.
"We need to help industrial policymakers to understand how to make industrial policy without undermining competition, because competition is useful and it promotes incentives. We also need competition authorities to understand that there are some cases where the market fails and whether there's a need for government intervention to reallocate resources to bring new technologies or if there's a coordination problem.”
One of the key agenda items during last week’s Seoul Competition Forum was also about whether the regulatory direction for digital markets should be focused on taking action in advance or retroactively.
An ex-ante policy aims to specify companies subject to regulation and requires them to comply, while an ex-post policy imposes sanctions only when illegal activities are found, which also helps reduce the burden on companies.
Many countries adopt different policy directions. The European Union, for instance, has adopted ex-ante regulations under its Digital Market Acts and designated six “gatekeepers” such as Google, Apple and Amazon to monitor more closely.
In the meantime, Korea has not yet decided on the exact direction amid mixed opinions among regulatory experts here.
Jenny said Korea is not lagging in taking action, and highlighted the importance of fully understanding the markets first to adapt laws without having to intervene in innovations.
In order to do so, he suggested the Korean antitrust regulator discuss the matter with other domestic authorities, including data and telecom regulators, as “one body,” before making the important decisions.