[경제밥도둑] There is no ‘law’ to stop the ‘fee abuse’ giant platform

Platform company illustration. Reporter Kim Sang-min

The current government’s platform self-regulation stance is shaking. The sound of implosion is also growing in the win-win council between the platform and the store companies. This is because it is not easy to bring about changes in platforms that are in a relatively ‘top’ position. This adds weight to the argument that a separate law is needed to regulate abuse of power on platforms.

The government’s platform regulation is largely divided into two directions. The revision to the Fair Trade Act introduced by the government last month focuses on ‘prevention of monopoly.’ The bill prohibits four types of actions by major platforms, including demanding preferential treatment or preferential treatment for the platform. Five to six large platform companies such as Google, Apple, Naver, and Kakao are eligible.

The other direction is the issue of unfair trade between platforms and stores. This includes the recent commission issues of delivery apps such as Baedal Minjok and the settlement cycle issues of e-commerce companies such as Timon and WeMakePrice. The government has shown that self-regulation rather than legal regulation is preferable for disputes between platforms and stores. It is an extension of this that the Fair Trade Commission last year proposed self-regulation measures for each industry, including delivery apps, open markets, and lodging apps.

Platform disputes amid self-regulation increase every year

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However, as platform disputes increase every year, question marks are placed on the self-regulation framework. According to data received by Kim Nam-geun, a member of the Democratic Party of Korea, from the Korea Fair Trade Mediation Service on the 14th, dispute mediation in the online platform sector reached 229 cases last year. It more than doubled from 111 cases the previous year. Disputes related to online platforms numbered only 12 in 2017, but have increased nearly 20-fold in six years. This year, it is expected to surpass the previous year’s record, with 208 cases as of the end of July.

Rep. Kim said, “As the scope of the platform economy expands, it is no longer easy to engage in economic activities without the platform,” adding, “Overseas countries such as Europe first regulated platform unfairness issues and then enacted laws to regulate monopoly issues. “Regulating monopolies but not separately regulating unfair issues is going against the international trend,” he said.

The ‘Timeef’ unsettled payment incident also ignited skepticism about self-regulation. Last year, during a National Assembly audit, it was pointed out that the settlement cycle for e-commerce was long, but at the time, Fair Trade Commission Chairman Han Ki-jeong said, “We will try to reduce the settlement period through self-regulation, and if not, we will review it legally.” In fact, the emphasis was on self-regulation. Then, when the ‘Timef’ incident broke out this year, the Fair Trade Commission decided to propose an amendment to the Large-Scale Distribution Business Act that regulates the settlement cycle. There was criticism that ‘the Fair Trade Commission has begun to impose sanctions on North Korea’.

Kim Nam-geun, a member of the Democratic Party of Korea, is being interviewed by the Kyunghyang Shinmun at the National Assembly on the 1st. Reporter Seong Dong-hoon

Because of this, there are growing voices calling for a separate law to be enacted to regulate the relationship between platform leaders. Rep. Kim proposed the ‘Act on Fairness of Online Platform Brokerage Transactions’ (Online Platform Act) last August. The gist of the bill is to give stores the right to negotiate with platforms regarding fees and settlement cycles. The idea is to allow stores and platforms to communicate from a horizontal perspective.

There is similar content in the current Franchise Business Act. The Franchise Business Act stipulates that ‘the franchise head office must faithfully respond to the franchisee’s request for consultation.’ Although there is a limitation in that it is not a mandatory regulation, it is meaningful in that it clearly specifies the negotiation rights of store owners and allows franchisees to engage in dialogue. Representative Kim said, “Negotiations between the headquarters and store owners are taking place in various places, including Twosome Place and Paris Baguette, through the right to form a group under the Franchise Business Act. “Granting the right to negotiate” is a system we are already familiar with, he said.

Kim Nam-joo, Chairman of the People’s Livelihood Economy Committee of the Lawyers for a Democratic Society (Minbyun), said, “If the right to negotiate on the platform is guaranteed, it will be difficult for stores to make one-on-one demands, but they will be able to raise their voices as a group and improve the platform’s position.” He said, “Since there is a single window for the needs of stores, negotiation efficiency can increase.” He said, “A similar system is already being implemented in Australia, and Japan is also granting negotiation rights to small and medium-sized cooperatives.”

“Like monopoly, unfair issues also need regulation.”

The idling of the government-promoted coexistence consultative body also adds strength to legal regulations. The Fair Trade Commission formed a public-private consultative body made up of platforms such as Kakao and store organizations in April to resolve the dispute over mobile gift certificate fees. However, after six months, only two meetings have been held. Even at the meeting, they stopped short of confirming their differences in position. The Fair Trade Commission’s position is that it will aim to come up with a win-win plan by the end of the year, but some small business groups are considering withdrawing from the council, saying further discussions are meaningless.

Kim Gwang-bu, co-chair of the National Franchise Owners Council, said, “If the platform presents a plan of ‘what to do,’ we can discuss it, but it is frustrating that they are not presenting any opinions at all.” “We are also considering it,” he said.

Due to this situation, the government is also changing its position and fiddling with its legal and regulatory cards. It has been reported that the government is considering a ‘fee cap system’ for delivery apps as discussions at the delivery app win-win council have been sluggish. They say that if the delivery app does not come up with a proper win-win plan, the maximum commission rate will be imposed by law. Currently, such delivery fee caps are being implemented in some states such as California and New York in the United States.

Rep. Kim said, “In order to regulate delivery app preferential commission systems, etc., a separate law is needed from the revision to the Fair Trade Act promoted by the government, rather than a ‘monopoly’ issue.” He added, “Whenever a platform-related problem arises, such as the Timeef incident, the existing law is revised.” “The ‘tinkering’ type of prescription should not be repeated,” he said.

Members of civil society groups for small and medium-sized merchants, including People’s Solidarity for Participatory Democracy, are shouting slogans at a press conference held in front of the National Assembly on December 13 last year to call for fair online platforms and passage of the anti-monopoly law. Reporter Seong Dong-hoon