By Lee Min-hyung
The Korean government is considering punitive measures against Google and Facebook for their alleged unfair business practices here, Fair Trade Commission (FTC) Chairman Kim Sang-jo said Sunday.
Kim accused the U.S. tech giants of stifling competition and monopolizing customer information by using their dominant market power.
“They do not pay any costs for sweeping data and using local network systems — established by taxpayers’ money here,” Kim said.
His comment comes amid growing calls for the FTC and government bodies to stop such overseas IT giants from using the nation’s legal loopholes.
“We need to take a careful approach (before implementing regulations on such companies),” Kim said.
He said there was no room for latecomers to compete in new data-driven industries, and this would hamper fair competition in Korea.
“People often think of the FTC as a regulator of chaebol governance structures and unfair business partnerships, but this is a thing in the past,” he said.
“Our new role is to establish a market structure to prop up emerging industries.”
Such industry-leading IT giants as Google, Facebook and Apple have come under fire in Korea for abusing their dominant positions and allegedly dodging taxes by operating as limited liability companies, which are not obliged to reveal their management or sales data here.
Their Korean counterparts — such as Naver — want the government to step in so companies like Google operate under the same conditions governing the local IT industry.
Naver is the nation’s largest portal operator with a market share of more than 70 percent.
In recent years, regulators in countries such as Spain and Italy have hit Google.
The latest in a series of controversies surrounding Google came last week with multiple reports the European Union may fine the search giant more than 1 billion euros ($1.1 billion).
The company has allegedly abused its market dominance by manipulating shopping search results to prioritize Google Shopping retailers, which the regulator viewed as restricting customers’ choices.
Despite such hard-line sanctions by overseas regulators, their Korean counterparts have so far kept a relatively low profile in terms of regulating or punishing the portal titan.
For this reason, Korean IT firms have stepped up their criticisms over the issue. Last year, Naver founder Lee Hae-jin urged such tech titans to establish data centers here, which would end the tax-related controversies.
He said this needs to be done because regulators here could not track specific profit data from the Korean branches of such companies as Google, Apple and Facebook.