South Korea, a global powerhouse in music and entertainment, is considering including music streaming in its proposed “Platform Competition Promotion Act” (PCPA).
The potential move comes amid concerns about the dominance of foreign giants like Spotify and Apple Music, raising anxieties about their impact on the Korean music industry and consumer choice.
The country’s Fair Trade Commission last December announced plans to introduce the PCPA, which aims to create a fairer playing field for smaller players by regulating dominant platforms in areas like app stores and search engines.
Despite the bill being currently delayed, the FTC has started investigating major international platforms like Google and Meta from the US and AliExpress and Temu from China over potential unfair business practices.
Now, regulators are exploring whether music streaming services warrant similar oversight due to their growing influence, local news outlets including Korea JoongAng Daily reported recently.
“The FTC is eyeing music streaming services to be included in this bill, as such platforms have infiltrated deep into people’s lives,” FTC Chairman Han Ki-jeong was quoted by JoongAng as saying at an event hosted by the American Chamber of Commerce in Korea (Amcham) on Thursday (March 7). The event held at the Grand Hyatt Seoul in central Seoul sought to offer insights into the FTC’s planned policies for this year.
“The FTC is eyeing music streaming services to be included in this bill, as such platforms have infiltrated deep into people’s lives.”
Han Ki-jeong, South Korea’s Fair Trade Commission
Han also highlighted the urgency of the PCPA to be enacted amid the growing influence of platform operators, arguing that existing legislation is “not enough” to regulate them.
“People’s daily lives are being reshuffled to revolve around platforms,” Han said, according to JoongAng.
“Such market monopolization by dominant platforms can damage consumers and SMEs that use their services. Social demand to reinforce monitoring of platform operators is growing, which is why the FTC will focus on anti-competitive practices such as platforms prohibiting other competitors from entering the market or hindering others’ business practices.”
However, Han declined to provide a specific timeline for the bill when asked by media outlets. “This is not the place or situation to discuss specific details… We will actively seek voices from the industry,” the official reportedly said.
JoongAng noted that tech giants such as Apple, Meta and Google did not attend the Amcham event, their second consecutive absence since January when the Fair Trade Commission held a closed-door meeting with global tech companies at AmCham’s office in Seoul to shed light on the bill.
The potential expansion of the PCPA to include music streaming apps comes as international music streaming companies continue to capture a significant share of the Korean market. Spotify launched in South Korea in February 2021. Now, local players like Melon, once the clear leader, are facing stiff competition, raising anxieties about the impact on Korean music discoverability and revenue.
“Social demand to reinforce monitoring of platform operators is growing, which is why the FTC will focus on anti-competitive practices such as platforms prohibiting other competitors from entering the market or hindering others’ business practices.”
Han Ki-jeong, South Korea’s Fair Trade Commission
If included in the PCPA, streaming platforms could be subject to more stringent data protection laws. Regulators might seek to ensure this data is stored securely and not used unfairly to manipulate user preferences. Scrutiny might also be placed on how music streaming platforms curate playlists and recommend music.
Regulators could also mandate music streaming platforms to invest a portion of their revenue back into the Korean music industry, potentially through artist development programs.
However, reports emerged that the bill has been stalled to carry out a “re-examination.”
US non-profit organization Computer & Communications Industry Association welcomed news of the suspension, with Jonathan McHale, CCIA Vice President of Digital Trade, saying, “We appreciate the [Korean Fair Trade Commission’s] plans to examine the issue with more deliberation and allow input from a range of stakeholders as they consider what steps to take next for a fair and competitive business environment in Korea.”
“We look to KFTC to work in partnership with the other voices in the inter-agency process to ensure that the final draft of the policy is fair and supportive of US firms’ presence in the market.”
Jonathan McHale, Computer & Communications Industry Association
“In particular, we urge Korea to continue reconsidering the need for ‘pre-designating’ specific companies, an approach that can lead to arbitrary and discriminatory burdens on targeted companies. We look to KFTC to work in partnership with the other voices in the inter-agency process to ensure that the final draft of the policy is fair and supportive of US firms’ presence in the market.”
However, the principle of “pre-designating” specific large digital companies for regulation is one that is gaining traction among regulators worldwide. The European Union’s recently-enacted Digital Services Act provides for stricter regulation of “very large online platforms,” that is, those used by more than 10% of the EU’s population of 450 million, among them Apple, Google, Meta, Twitter and TikTok.Music Business Worldwide
