Following in the footsteps of those who seek to curb the power of “Big Tech” globally, the Republic of Korea (ROK) is poised to adopt strict regulations on select technology companies.
ROK President Yoon Suk Yeol announced last week his support for new measures that aim to curtail the activities of technology companies designated as “dominant platform business entities.” These measures, which are expected to be considered by the National Assembly in the coming days as part of a new bill proposed to respond to unfair online market practices, appear to be Korea’s own version of the European Union’s Digital Market Act (DMA), which purports to go after so-called Big Tech “gatekeepers.”
There is much debate on the wisdom of these bills. But one factor must be considered: their national security consequences. A closer look shows DMA-style regulations actually make countries more vulnerable to nefarious actors. In Korea’s case, such a move would be a gift to the Chinese Communist Party (CCP).
Since the EU passed the DMA in 2022, other countries have rushed to formulate their own versions, applying Europe’s blueprint to their own digital policies. While the goal of maintaining a healthy marketplace that fosters competition and consumer choice is a compelling one, DMA-style legislation comes with many significant drawbacks that should give our Korean allies pause. Though designed to prevent digital tech monopolies and give consumers more options, these laws can have serious implications for economic and national security. This is especially the case for the United States’s key ally and economic partner.
First and foremost, these laws undermine national security by unevenly regulating the digital market. The most innovative tech leaders, primarily American companies, are likely to be the only ones designated as “dominant platform business entities” by ROK regulators. Meanwhile, Chinese tech giants like Alibaba and TikTok parent company ByteDance, which present clear national security threats, would be left untouched.
In September, TikTok announced its plans to expand its creator program to Korea, seeking to boost growth there. Similarly, Alibaba began investing millions of dollars to expand into Korea last year, labeling it a “priority market.” Both firms’ allegiance is mandated to Beijing by China’s 2017 national intelligence law. In practice, the ROK’s new law would advantage Chinese firms by giving them an opportunity to dominate the digital economy while American and Korean companies are hindered from truly competing and innovating. Furthermore, a DMA-style law would not only be a gift to these companies but also to the CCP, which exerts control over these firms, using them to collect swaths of user data and putting at risk the national security of the ROK, the United States and beyond.
If enacted, the ROK’s DMA-style regulations, which almost exclusively target American businesses, could produce unnecessary friction between Washington and Seoul. This friction would come at a time when the U.S.-ROK bilateral relationship is exceptionally important to maintaining security and economic prosperity in the Indo-Pacific. China’s increasing economic and military aggression, as well as North Korea’s threatening and destabilizing behavior, require both U.S. and ROK leadership to remain in lockstep as they address matters that affect both nations’ economic and national security. The unshakable strength of the U.S.-ROK alliance is rooted in decades of mutual trust and cooperation. It is important that this remains so, not only for the sake of the alliance but for the stability and security of the entire Indo-Pacific region.
Additionally, the second- and third-tier effects these laws have on the economies they regulate remain unclear. For example, the EU has only just begun to implement and enforce the DMA, though it went into force a year ago; so far, critics agree that the results are not positive. In the United States, Congress has resisted implementing DMA-style legislation. After much debate on Capitol Hill, bills such as the American Innovation and Choice Online Act (AICOA) and the Open App Markets Act (OAMA) have repeatedly fallen off the docket as both the Senate and the House have come to understand the vulnerabilities such legislation would create — not only for U.S. national security but for the safety of the American people.
For Korea, such regulations would most certainly drive up compliance costs for just a few tech companies, likely leading to diminished investment, stymied innovation, fewer consumer choices and higher prices for customers. This would set American and Korean companies back years while giving CCP-controlled companies the edge in the development of the digital platforms of the future.
While the goals of this proposal — to foster free, competitive, consumer-driven markets — will have wide popular appeal, the costs of enacting such sweeping and transformative regulations with haste could cause great harm and actually be counterproductive to this goal. Before President Yoon and the National Assembly push ahead with this proposal, they must carefully evaluate the second and third order effects it would have, not only on the tech platforms they intend to regulate but also on the larger digital economy and the bilateral relationship with the United States, South Korea’s primary economic and military partner.
Ambassador Robert C. O’Brien (ret.) served as the 27th U.S. national security adviser, from 2019–2021. He is currently chairman and co-founder of American Global Strategies LLC.