South Korea, Taiwan, Japan monitor EU's Digital Markets Act
Countries including South Korea and Taiwan are taking a cautious approach to tech regulation and assessing the impact of existing laws like the EU's Digital Markets Act.
As the European Union leads the way on tech regulation through laws like its Digital Markets Act, East Asian countries including South Korea, Taiwan and Japan are watching closely to see the effects of such regulation on innovation and competition.
The Digital Markets Act in particular has inspired regulatory leaders in South Korea, Taiwan and Japan to consider how best to approach tech regulation. Japan recently adopted the Act on Promotion of Competition for Specified Smartphone Software, a law narrowly tailored to enhancing third-party competition in the smartphone market. Meanwhile, leaders in South Korea and Taiwan proposed tech regulations that met with opposition and failed to pass.
Given the "complicated and dynamic nature of digital competition," the Taiwan Fair Trade Commission will research competition among digital platforms and consider factors related to digital markets, such as network effects, when reviewing competition cases, said Andy Chen, vice chairperson of the TFTC. Network effects are a phenomenon where digital platforms improve over time with more users.
"We're following the rule of reason," Chen said during a panel discussion hosted by the Information Technology and Innovation Foundation (ITIF). "At this moment, it may be more desirable than regulation in Taiwan."
A waiting game for some
In South Korea, lawmakers introduced a number of tech regulation bills targeting digital platforms, similar to the Digital Markets Act, but the bills failed to pass due to concerns about harm to innovation and the relationship with the U.S., said Richard Shin, senior adviser at law firm Bae, Kim & Lee.
Tech regulations like the Digital Markets Act specifically target large U.S.-based tech companies, but South Korean companies might also be affected if the country passes similar legislation, Shin said.
"These types of regulations will kill off Korean champions," he said.
Why jump on the bandwagon from the start when we can learn from their experience to see what really happens?
Richard ShinSenior adviser, Bae, Kim & Lee
The Korea Fair Trade Commission is taking a more cautious approach by gathering stakeholder opinions through webinars and panel discussions, Shin said. Any tech regulation South Korea passes would likely focus on prohibitions for large tech companies, such as self-preferencing, rather than imposing requirements, he added.
"Why jump on the bandwagon from the start when we can learn from their experience to see what really happens?" he said. "Does innovation deteriorate? What kind of impact does it have on the market? Those are the kinds of things we could examine and understand before making the final regulation in Korea."
Though Taiwan and South Korea are holding off on tech regulation for now, Japan has followed in the EU's footsteps with its smartphone law. This law requires companies like Google and Apple to grant third-party access to their app stores. It also prohibits the big tech companies from giving their own services preferential treatment and using competitor data.
However, Shigeru Kitamura, president and CEO of Kitamura Economic Security, said he has some security concerns with Japan's new law requiring companies to open their platforms.
"Competition should not come at the cost of security," Kitamura said during the panel discussion.
Concerns about China
Heavy regulations aimed at large tech companies won't necessarily benefit the U.S., Japan or other countries enforcing such rules, argued Joseph Coniglio, director of antitrust and innovation at ITIF. Instead, he said it would benefit countries that don't have to play by the rules.
"It's going to be China who's going to benefit," Coniglio said during the panel.
Shin agreed, noting that the market presence of Chinese companies such as Temu and Alibaba has "increased tremendously." Temu is an online platform offering clothes, jewelry and other items at cheap prices, while Alibaba is a multinational technology company specializing in e-commerce and retail.
"These types of regulations tie the hands of the existing players, and at the same time allow some of these Chinese firms to enter the market in an accelerated manner," Shin said. "That raises concern."
Makenzie Holland is a senior news writer covering big tech and federal regulation. Prior to joining TechTarget Editorial, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.
