1.

Implementation of AI Service Market Fact-Finding Survey in May 2026

On May 21, 2026, the KFTC initiated an AI Service Market Fact-Finding Survey targeting major domestic and foreign businesses participating in the domestic AI service market, in order to examine and analyze transaction practices and competitive conditions in the market. This survey is the third such initiative by the KFTC, following its 2024 general generative AI market survey and 2025 AI infrastructure data survey.
 

A.

Background and Purpose of Survey

As AI increasingly becomes embedded in everyday products and services, such as smartphones, vehicles, web browsers and social media, the incorporation of AI services is helping to promote market innovation and competition, and enhance consumer benefits. At the same time, regulators are expressing growing concerns about (i) anti-competitive effects, such as deepening market concentration among a small number of companies, and (ii) consumer harm from practices such as false or exaggerated advertising using AI services.

In response, major global competition authorities—including the UK Competition and Markets Authority, the French Competition Authority and the Australian Competition & Consumer Commission—have increasingly focused their research and analysis specifically on the AI service market within the broader AI value chain. Against this backdrop, it is understood that the KFTC likewise initiated this fact-finding survey to clearly identify the structure and competitive conditions of the domestic AI service market, where domestic and foreign large enterprises and various startups participate, and to preemptively address potential competition and consumer issues.
 

B.

Survey Plan and Content

Following consultations with industry and academic experts, the KFTC launched the survey, which is to be conducted in the following two stages.

In Stage 1, the survey targets 29 major domestic and foreign “AI service developers” that provide AI services to domestic users, and 17 major domestic and foreign “providers of products with embedded AI services” that offer their own or third-party AI services embedded in their products or services. The key topics covered include: (i) current AI business operations and transaction status regarding AI service integration, (ii) competitive dynamics within the AI service market, (iii) methods of delivering AI services to consumers, and (iv) any experiences with anti-competitive conduct or unfair trade practices.

In Stage 2, the survey targets consumers who use AI services, with the survey designed to examine: (i) patterns of AI service usage, and (ii) level of consumer awareness regarding AI services embedded in, and provided through, products.
 

C.

Future Policy Tasks and Implications

The KFTC plans to closely analyze the results of this fact-finding survey and, through ongoing engagement with AI service market participants and experts, publish an AI Downstream Market and Competition Policy Report within the year.

As with the publication of the Generative AI and Competition Report in 2024 and the Data and Competition Report in 2025, this survey and the resulting policy report are also expected to focus on a targeted analysis of issues reflecting the unique characteristics of the AI service sector, while outlining future enforcement and policy directions.

In light of the KFTC’s current regulatory priorities and the global posture of overseas antitrust authorities, the key focus areas are expected to include the following.
 

a.

Fairness in the Embedding and Distribution of AI: Assessing potential anti-competitive concerns arising during the integration of AI services into consumer-facing devices and platforms, such as bundling, exclusive dealing or unfair refusal to deal (access restrictions).
 

b.

Self-Preferencing and Distortion of Choice by Agentic AI: Addressing growing regulatory scrutiny toward agentic AI. Specifically, evaluating whether autonomous AI agents acting on behalf of consumers engage in self-preferencing by prioritizing proprietary services, or distort informed consumer choice through opaque recommendation algorithms.
 

c.

Harm to Consumer Interests and Unfair Data Collection: Given direct consumer interaction in this downstream market, reviewing potential infringements on consumer welfare, including unfair data harvesting via dark patterns and deceptive or exaggerated advertising related to AI performance.
 

2.

Implementation of Amended Notice on Operation of Substantiation for Labeling and Advertising

On September 3, 2026, the KFTC’s amended Notice on the Operation of Substantiation for Labeling and Advertising (the “Substantiation Notice”) entered into force. The Substantiation Notice, promulgated pursuant to Article 5 of the Fair Labeling and Advertising Act (the “FLAA”), authorizes the KFTC to request companies to submit substantiation materials to support claims that may potentially violate the FLAA.

This amendment (i) clarifies that substantiation is also required for performance claims regarding emerging-technology products such as AI, (ii) specifies the grounds for extending the period for submitting substantiation materials while shortening the extension period, (iii) establishes a legal basis for suspension orders in cases of non-submission and (iv) introduces a compliance checklist to assist businesses in self-auditing substantiation requirements before and after launching claims.
 

A.

Main Content of Amended Substantiation Notice

The main content of the amendment falls into the following four broad categories:
 

(i)

Clarification of Substantiation Obligations for Emerging Technology Labeling and Advertising: The KFTC has explicitly codified that claims involving emerging technologies, such as AI-powered features, are subject to substantiation requirements. Drawing from past precedents, the KFTC added specific examples of claims where substantiation is critical, focusing on health, safety and performance. Key examples of claims include: efficacy and composition claims such as “enhances concentration and memory,” “made with ingredients harmless to the human body,” “safer with AI technology,” and “○○% down feathers,” as well as ranking-related expressions such as “no. 1 in customer satisfaction” and “no. 1 in academic improvement.”
 

(ii)

Specification of Grounds for Extension and Shortening of the Extension Period for Submitting Substantiation Materials: The KFTC has replaced the previous broad standard of “force majeure events, such as natural disasters” under Article 76 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act with specific grounds for requesting an extension: natural disasters; mergers and acquisitions, commencement of rehabilitation proceedings, bankruptcy, or comparable ongoing procedures; seizure or temporary custody of books and evidentiary documents by an authorized authority; and material disruptions to business operations caused by fires, disasters or similar events. In addition, to ensure adherence to the principle of “substantiate first, advertise later,” the extension period has been shortened from within 30 days to within 15 days from the date the underlying ground ceases to exist.
 

(iii)

Establishment of a Legal Basis for Suspension Orders in Cases of Non-Submission: The KFTC has established provisions authorizing it to order the immediate suspension of labeling or advertising activities where a business operator continues such labeling or advertising without submitting the required substantiation materials within the deadline (including any approved extensions). This underscores that businesses must secure verifiable substantiation materials prior to aggressive marketing, while enabling regulators to halt unfair claims swiftly to prevent widespread consumer harm.
 

(iv)

Introduction of a Business Compliance Checklist: To ensure businesses clearly recognize their burden of proof, the KFTC established a two-phase compliance checklist to help them self-audit their substantiation practices. Phase 1 (Pre-Advertising) checklist helps companies verify which claims require proof and ensure their substantiation materials satisfy statutory requirements before release. Phase 2 (Post-Advertising) checklist helps companies review response deadlines, submission procedures, and statutory sanctions for non-compliance if they receive an official substantiation request after the labeling or advertising has begun.
 

B.

Implications

Following this amendment, businesses making factual claims in their labeling and advertising now face an increased burden of substantiation. Most notably, companies promoting products or services centered on emerging technologies, such as AI, must secure objective and verifiable substantiation materials before launching any promotional campaigns. Furthermore, because the extension period for submitting substantiation materials has been shortened from 30 days to 15 days, companies have significantly less time to gather and prepare documentation once a regulatory request is issued.

To mitigate enforcement risks, companies should establish robust pre-clearance procedures to vet factual claims in their labeling and advertising relating to the human body, safety, environment, emerging technologies and performance metrics. These claims must be backed by credible, scientific and objective evidence—including test results, survey findings, expert opinions and academic literature—secured prior to release. Crucially, it should be noted that failure to submit required materials within the designated timeframe may expose businesses not only to an administrative suspension order for the labeling or advertising in question, but also to administrative fines of up to KRW 100 million pursuant to Article 20 (2) 2 of the FLAA.