With the acceleration of the Fourth Industrial Revolution, the Korean government authorities have recently announced various policies and proposed legislative bills concerning online platforms, artificial intelligence (“AI”) and over-the-top (“OTT”) online video services.

• Online platform market: The Korea Communications Commission (the “KCC”) and Korea Fair Trade Commission (the “KFTC”) are currently discussing bills with competent authorities on (i) prohibited acts by online platform service providers and (ii) sanctions for any violations.  

• AI: The Ministry of Science and ICT (the “MSIT”) is continuing its efforts to improve the legal system with regard to AI by establishing an AI-related legal system enhancement team and preparing AI-related bills.  

• OTT service: There are ongoing discussions over bills on self-rating system for media content and classification of OTT services as a special value-added telecommunications business.  

1.   Key Contents of Proposed Online Platform Laws

On November 27, 2020, National Assembly member Hye-Sook Jun proposed a legislative bill titled the “Act on Protection of Online Platform Users” under the administration of the KCC (the “KCC Bill”).  Subsequently on January 28, 2021, the government proposed a similar bill titled the “Fairness in Online Platform Intermediary Transactions Act” under the administration of the KFTC (the “KFTC Bill,” and together with the KCC Bill, the “Bills”).  While the KCC Bill is focused on protecting the rights and interests of online platform users, the KFTC Bill is more focused on establishing a fair trade order between online platform intermediary service providers and business users.  

Both the KCC Bill and KFTC Bill define the concept of “online platform operators” and “online platform intermediary service providers,” and are only applicable to business entitles that meet certain sales revenue and user number thresholds.  The Bills also contain provisions relating to extraterritorial application, prior notice requirement in the event of restricting the use of service or amending/terminating service agreement, as well as various types of prohibited acts.

The KCC Bill mainly defines acts prohibited under the Telecommunications Business Act (the “TBA”) in the context of the relationship between online platform operators and business users of online platforms.  For instance, the KCC Bill prohibits online platform operators from (i) refusing to perform contracts or provide services without any justifiable reason, (ii) refusing or restricting appropriate sharing of profits, and (iii) imposing unreasonable or discriminatory conditions or restrictions.  On the other hand, the KFTC Bill specifies the provisions concerning abuse of superior bargaining power under the Monopoly Regulation and Fair Trade Law by prohibiting (i) unfair coercion to purchase, (ii) coercion to provide economic benefits, (iii) shifting of the burden from losses, (iv) imposition of disadvantages and (v) interference with business activities.  

Additionally, the KCC Bill contains separate provisions intended to protect users — for instance the platform operators are required to report their terms of service to the KCC, and acts such as unfairly restricting or suspending the subscription or use of service or not notifying important terms of contract are prohibited.  

The Bills impose administrative fines on the violation of prohibited acts (up to 3 to 5% of the violator’s sales revenue under the KCC Bill or up to twice the relevant violation’s fine amount under the KFTC Bill), but do not contain any provision on subjecting violators to criminal punishment.

2.   AI-Related Policy Updates

On March 19, 2021, the MSIT officially established the Second Expert Group for Establishing the AI Regulation System.  The MSIT appointed a total of 30 specialists in each field, including law, humanities, philosophy of science and technology, as expert group members.  The expert group plans to research legislative issues relating to the utilization of AI by organizing sub-working groups.  In addition, the expert group will partake in short-term tasks such as enacting a framework law for developing the data industry as well as mid to long-term tasks such as determining ways of granting legal personhood to AI.

Furthermore, the MSIT recently discussed submission of a legislative bill specific to AI (the “AI Bill”) based on the Framework Act on Intelligence Informatization.  The MSIT plans to undertake full-scale efforts to establish an AI regulation system, including obligations to protect AI algorithms and ways to safeguard users.  

3.   Updates on OTT Service-Related Bills and Self-Rating System

Under the current Promotion of the Motion Pictures and Video Products Act (the “Motion Pictures and Video Products Act”), OTT service providers are required to receive ratings for their paid videos from the Korea Media Rating Board (the “KMRB”).  However, as a part of the government’s “Digital Media Ecosystem Development Plan” (published jointly by the relevant ministries on June 22, 2020), the government announced that it would adopt a self-rating system for video content distributed by OTT service providers to minimize regulation.  This system would allow OTT service providers to self-rate the videos they distribute online without going through the KMRB.

The legislative attempts to adopt the self-rating system have been ongoing.  On September 8, 2020, National Assemblyman Gwang-Jae Lee submitted an overhaul proposal of the Framework Act on the Video Industry Promotion, which introduces a self-rating system for online video content providers that meet certain requirements and reporting obligations.  Similarly, the Ministry of Culture, Sports and Tourism (the “MCST”) pre-announced an amendment bill to the Motion Pictures and Video Products Act on May 24, 2021, introducing a self-rating system for the online video content providers designated as self-rating business operators.

Meanwhile, on August 31, 2020, the MSIT pre-announced a partial amendment bill to the TBA that categorizes OTT services as a special type of value-added telecommunications service.  By including “value-added telecommunications service providing video content through information and communications networks” as a special type of value-added telecommunications service, this bill introduced OTT service providers’ obligation to report their value-added telecommunications business.

As such, various government authorities, including the KCC, MSIT and MCST, have recently discussed various legislative measures related to the regulation and legal status of OTT service providers.

We advise relevant parties to continuously monitor the legislative process of the above bills as they are still underway and the specific terms may change.