The Anti-Market Online Platform Act

The Fair Trade Commission, trapped in the mistaken belief that regulation is a cure-all, has come up with the Platform Competition Promotion Act (Online Platform Act). It is essentially saying that although no one can know the future of platforms, because problems might arise later, regulation should be created first. Without even identifying what the problem is, it seeks to place the conduct of the relevant companies under regulatory control from the outset, which will end up making everyone a victim.

There are fundamental limits to the Fair Trade Commission setting up its own ideal world and then turning it into a regulatory framework. Quite apart from whether it is feasible, this design-based approach distorts business activity and reduces social benefits. That is because the government’s artificial order forcibly adjusts the voluntary cooperation of market participants, raising costs and lowering welfare.

Emerging markets are created by entrepreneurs opening up new businesses through innovation and a positive mindset. A bureaucratic attitude neither creates new business nor benefits the world. Government authorities should stop at punishing wrongful conduct; stepping forward to create a new world themselves is nothing more than arrogance and experimentation.

Because platform businesses are especially characterized by scale, calls to regulate them can become politically loud. It is understandable that the Fair Trade Commission would try to introduce new regulations and impose controls on the assumption that harm may occur in the future. This approach, driven by such primitive instincts, is the product of ignorance about the world of modern business.

The corporate world can produce results that are difficult for ordinary people to understand. When companies generate enormous profits almost like magic, they may be viewed positively as something mysterious, but viewed negatively, they become targets of a witch hunt. When new innovations emerge, their substance is often hard to understand, and so they become targets that politicians and policymakers want to regulate.

Regulation stands in the way of opening up a new world through business. It blocks new forms of business services and takes away the value consumers have enjoyed. It can erase the characteristics of platform business that are tied to advances such as the distribution revolution and increasingly sophisticated logistics systems.

Platform businesses have provided consumers with high-quality services. In shopping especially, they have improved convenience for consumers and reduced their cost burden. Service quality has improved through easy and simple shopping and fast delivery, and consumer benefits have increased. If these are regulated under the Online Platform Act, competition will be restricted and consumer benefits will decline.

Regulation cripples competition and stifles services that were possible through new methods. The damage will be great, yet no one other than the relevant government department will gain anything from it. The benefits the Fair Trade Commission gains through regulation are clear: it can expand its influence and energize related businesses through regulation.

The world is entering an era of platform competition. Rather than regulating with premodern methods, the desirable path—one that benefits both consumers and the broader business economy—is to help our companies respond more quickly and effectively in a rapidly changing environment so that they can find better ways forward.

Sung-no Choi, President, Center for Free Enterprise (CFE)

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Original title: 시대 역행 '온플법'

Author: Sung-no Choi

Date: 2024-01-12

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=26374