Safeguarding U.S. Companies from Unfair South Korean Competition Policies

Advanced technology goods and services play a crucial role in shaping the trade relationship between the United States and the Republic of Korea (ROK). For U.S. firms, South Korea is a key market as well as a major source of talent, innovation, and partnership. For South Korea, U.S. firms are major employers and providers of digital products and services. However, the latest U.S. National Trade Estimate continues to highlight a significant and persistent problem where South Korea uses discriminatory, restrictive, and arbitrary behind-the-border regulations and enforcement to target U.S. tech firms.[1] Within this context, the actions of the ROK government and, specifically, the Korea Fair Trade Commission (KFTC), the country’s competition authority, provide a clear example of challenges that the United States should seek to confront in trade negotiations with the ROK. The KFTC’s actions can be seen as violating the essence of the Trump administration’s “Reciprocal Trade Memo,” which targets policies that represent “unfair or harmful acts, policies, or practices” and are a “structural impediment to fair competition.” Recently elected ROK president Lee Jae-myung pledged to continue this approach toward digital platform companies during his campaign, and since taking office has committed to strengthening the KFTC, including by increasing its personnel.[2] The KFTC’s actions have drawn criticism and opposition from both U.S. companies and the U.S. government.[3] President Donald Trump’s criticism of European Union regulators for targeting Apple, Google, and Meta could similarly be applied to South Korea’s targeting of U.S. firms.[4]

The United States and South Korea are discussing various trade issues in the context of the Trump administration’s decision to pause reciprocal tariffs for 90 days. This creates a diplomatic window for the new government in Seoul to reset and reaffirm its commitment to fair, balanced, and frictionless trade, including with regard to its application of competition policy to U.S. tech firms. To address this issue, the ROK could agree to detailed safeguards and nondiscriminatory treatment provisions to prevent the KFTC from misusing competition policy in the future. The United States and South Korea could do this by repurposing provisions from the competition chapter in the U.S.-Mexico-Canada Agreement (USMCA). The two countries could use these provisions to update the competition policy chapter (chapter 16) in the Korea-U.S. Free Trade Agreement (KORUS) or as part of a bilateral executive agreement. For the United States, such a development would serve to protect U.S. companies from targeted investigations. For the ROK, addressing the issue could reduce the risk that the country could be subject to heightened reciprocal or other tariffs from the United States.[5]

This brief provides an overview of the KFTC’s problematic approach to competition policy and discusses how an executive trade agreement or revisions to KORUS could address the KFTC’s overly aggressive use of competition policy against U.S. firms.

The KFTC’s Problematic Track Record

The KFTC has demonstrated a pattern of targeting U.S. firms. Similar to the provisions in the EU’s Digital Markets Act (DMA), the KFTC—through proposals such as the Platform Competition Promotion Act (PCPA)—seeks to create an ex ante competition policy where regulators (i.e., the KFTC itself) can target specific firms, determine potential business behavior that might hurt competition, and define competition in broad terms. This approach includes designating dominant firms and platforms. Like the DMA, the KFTC wants to establish thresholds to designate dominant firms and platforms (so-called gatekeepers) that align with the claimed market power of large U.S. tech firms.[6] While the KFTC also investigates South Korean firms (like Naver and Kakao), U.S. firms have consistently been the target of major enforcement action. It is also clear that U.S. firms are the ones South Korea seeks to target. Meanwhile, the KFTC exempts smaller firms and, in effect, Chinese rivals.

The KFTC defends its proposals by explaining that they are “designed to align with global regulatory standards, such as the EU’s Digital Markets Act.”[7] The KFTC’s explicit reference to the DMA should be a clear signal to the Trump administration as to why it deserves priority attention in trade talks.

The KFTC’s track record is part of a troubling global development where competition policy regulators follow the EU in proactively imposing measures on large firms to prevent hypothetical anticompetitive behavior before it occurs.[8] This is a move away from the traditional ex post enforcement approach, which reacts to violations only after they are detected and when there are clear and direct impacts on competition and consumer welfare. This shift is particularly problematic because many of the targeted business practices benefit consumers and support innovation.

For example, in December 2023 the KFTC proposed the PCPA, which included ex ante regulation targeting designated “dominant platform operators.” The PCPA was inspired by the EU’s Digital Markets Act and Section 19a of Germany’s Competition Act. The KFTC clearly aimed to follow the EU’s DMA, which went into effect a few months before the PCPA was proposed. The introduction of the PCPA followed several earlier attempts to introduce ex ante platform legislation.[9] In September 2024 the KFTC responded to criticism of its proposal—which the KFTC’s own task force of experts did not endorse—announcing its intention to instead pursue amendments to South Korea’s existing antitrust law, the Monopoly Regulation and Fair Trade Act (MRFTA).[10]

However, the new MRFTA proposal retains problematic elements. It introduces legal presumptions of dominance for platforms across six categories: online intermediaries, search engines, digital content services (e.g., video platforms), social networks, operating systems, and online advertising. These presumptions will apply to platforms that exceed a specific threshold, such as 60% market share and 10 million users. Firms can receive exemptions if their annual turnover is less than 3 trillion South Korean won. These thresholds are likely to capture a handful of companies, potentially including Google, Apple, Kakao, Naver, and Meta.[11] Additionally, the proposal would increase the cap on fines from 6% to 8% of relevant turnover.[12]

The MRFTA amendments, proposed by the previous administration in Seoul, would also prevent targeted platforms from self-preferencing (such as favoring their own services on a platform), tying (such as requiring end users to use their browser, identification, or payment services), and restricting multi-homing (connecting computer networks) and platforms’ access to and transfer of data.[13] Moreover, dominant online platform operators bear the burden of proof to provide pro-competitive justifications, such as demonstrating consumer welfare gains. In the absence of such proof, such practices are presumed to be anticompetitive and therefore prohibited. This contrasts with the rule-of-reason approach in U.S. antitrust law, wherein authorities must first establish that conduct is anticompetitive before companies are required to offer pro-competitive justifications.[14]

U.S. firms are also fearful of the KFTC given its history of selective and aggressive enforcement. Based on interviews conducted for this brief, U.S. firms report heavy-handed raids and investigations, which go beyond what is appropriate and necessary for regulatory investigations. U.S. tech firms view broad KFTC inquiries into digital issues as a prelude to future investigations and fines against them. Firms’ reluctance to speak on the record has been attributed in these interviews to the fear that they may be targeted by future investigations, reflecting the lack of evidentiary basis for KFTC activities.

Major KFTC investigations of U.S. tech firms are summarized below:

• Qualcomm. In 2016 the KFTC fined Qualcomm approximately $853 million for unfair business practices related to patent licensing and modem chip sales. While the fine was reduced in court, the case accused Qualcomm of abusing its dominant market position to force unfavorable terms on South Korean handset manufacturers.[15]
• Google. For the last two years, the KFTC has been investigating Google’s YouTube Music for bundling practices. It has yet to announce a decision on the investigation.[16] In 2023 the KFTC fined Google 42.1 billion won for blocking the release of mobile video games on a competitor’s platform.[17] In 2021 the KFTC imposed a fine of around $177 million on Google for allegedly blocking customized versions of its Android operating system and abusing its dominant market position.[18]
• Apple. In 2021 the KFTC fined Apple 300 million won (about $264,000) for obstructing antitrust raids and refusing to hand over documents. It also referred one of Apple’s executives for criminal prosecution.[19] In 2021 the KFTC and Apple came to an agreement to end an investigation in exchange for Apple investing 74.5 million won into a support program for small businesses.[20] Though this did not result in a large fine, the case is nonetheless notable as the criminal referral demonstrates the long-standing argument of U.S. firms that KFTC enforcement, regardless of the magnitude of the alleged activity, is often designed to intimidate and target individuals through aggressive enforcement, regardless of actual guilt.
• Coupang. In 2024 the KFTC fined Coupang—a U.S.-based firm that generates over 40 trillion won ($28 billion) in annual sales in South Korea—approximately 140 billion won ($98 million). The fine was based on the prohibition of what the KFTC describes as deceptive practices rather than abuse. The targeted practices are common retail practices that involve algorithm-based product placement. The investigation included a search of Coupang’s offices.[21] In 2021 the KFTC fined Coupang 3.3 billion won for unfair business practices. In 2024 the company won a legal challenge in the Seoul Hight Court, which found that the KFTC’s decision was based on insufficient evidence regarding Coupang’s demand for price increases.[22]
• Meta, Coupang, Google, and Apple, among other firms. In March 2025 the KFTC announced a fact-finding survey targeting major firms at home and abroad to investigate competitive restrictions in the artificial intelligence (AI) data market. In addition, the KFTC plans to conduct a legal review to determine whether competitive restrictions in the AI data market might constitute an abuse of a firm’s dominant market position or unfair trading practices under Fair Trade Law (akin to a 2019 German competition authority’s investigation into Meta).[23] It is notable that the KFTC did not include any Chinese AI firms, many of which have significant operations in South Korea, in its investigation.

Competition Policy as One of Many Nontariff Barriers to U.S.-ROK Digital Trade

South Korea’s other nontariff barriers to digital trade provide important context for understanding the KFTC’s problematic approach to competition policy. Many U.S. National Trade Estimate Reports detail the country’s track record of using discriminatory regulations as a nontariff barrier to target U.S. firms. For example, a 2022 amendment to South Korea’s Telecommunications Business Act prevents large (mainly U.S.) platforms from forcing developers to use their in-app payment systems.[24] The thresholds it uses to identify large platforms captures several U.S. firms but only one Korean firm.

The U.S. Trade Representative (USTR) has also stated that “Korea’s restrictions on cross-border data flows undermine U.S. competitiveness in the Korean market and inhibit U.S. companies from providing innovative products like Google Maps and Apple Maps” and that “U.S. firms are losing out in the Korean markets for reinsurance and navigation services—which is conservatively estimated at $12 billion.”[25] Similarly, South Korea’s Cloud Security Assurance Program effectively precludes U.S. cloud firms from the public sector market.[26] This program’s data transfer restrictions (known as data localization) and cloud restrictions were supposedly introduced for national security reasons, but the real impact is hampering competition in navigation and other services from foreign service providers, which is a veiled anticompetitive policy.

South Korean digital trade restrictions are why Representative Carol Miller proposed in 2024, and reintroduced in May 2025, the U.S.-ROK Digital Trade Enforcement Act—legislation that would authorize trade restrictions if the ROK were to impose discriminatory digital competition regulations.[27]

Policy Options for Addressing the KFTC’s Discretionary and Discriminatory Enforcement Practices

The United States has tried to use KORUS to address competition-related concerns in South Korea in the past. In 2019 the USTR led formal consultations under KORUS’s chapter on competition-related matters (chapter 16) to get South Korea to improve procedures in KFTC competition hearings, which denied U.S. firms certain rights.[28] The issue is the country’s noncompliance with KORUS Article 16.1.3, which states that a party in an administrative hearing related to competition must “have a reasonable opportunity to…review and rebut the evidence and any other collected information on which the determination may be based.”[29] The United States initiated formal consultations after South Korea failed to address the issue after multiple meetings, letters, and formal comments.[30] Even as it continues to monitor Korean commitments arising from the 2019 consultation, the United States has identified new concerns about proposals from the KFTC and the National Assembly “to regulate certain suppliers of digital services that meet global and national revenue thresholds.”[31] South Korea’s draft amendments to the Monopoly Regulations and Fair Trade Act reinforce U.S. questions about the country’s approach and potential noncompliance with KORUS obligations.

The United States could consider pressing South Korea to modernize KORUS’s competition chapter or make additional commitments via a bilateral executive agreement to eliminate the KFTC’s discretionary and discriminatory enforcement practices. The fix could draw on standards used in the USMCA and include the following provisions.

• Prohibition of discriminatory practices. South Korea could commit to abstaining from practices that directly or indirectly target U.S. firms, including politically motivated investigations, disproportionate sanctions, coercive settlement tactics, and the use of civil infractions as pretexts for criminal prosecution. Such provisions could mirror the USMCA’s binding language in Articles 21.2 and 21.3, requiring nondiscriminatory treatment and impartial administration of competition law.

• Additional due process and procedural and burden of proof safeguards. As is mandated under USMCA Article 21.2(7), South Korea must guarantee due process in all enforcement proceedings, including prior notification of investigations, access to full records and evidence, rights to legal counsel, and the opportunity to meaningfully contest allegations before an impartial adjudicator. Furthermore, commitments should not shift the burden of proof onto defendants in a manner inconsistent with the principles of due process and procedural fairness.

• Commitments on regulatory neutrality and nondiscrimination. The ROK could commit to applying consistent legal standards to both domestic and foreign entities, including prohibiting frameworks that presume monopolistic dominance based on market share thresholds.

• A defined scope for legitimate competition policy objectives. The ROK could define a clear and objective scope for competition-related policy goals (e.g., combating cartel behavior, illicit collusion, and abuse of market dominance) and explicitly prohibit the misuse of competition law to pursue industrial policy, protect domestic competitors, or serve noncompetition objectives. This could align with the USMCA’s language on policy enforcement and, additionally for South Korea’s purposes, with standards of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

• A broader scope of KORUS dispute settlement for competition policy. The challenge for the United States lies in ensuring that South Korea adheres to new commitments. While competition provisions often fall outside traditional state-to-state dispute-resolution mechanisms in U.S. trade agreements, more is likely needed in the case of the U.S.-ROK trade relationship due to the KFTC’s extensive track record despite the existence of KORUS. KORUS allows for use of dispute settlement for discrete elements involving competition in the area of state enterprises that are designated and government monopolies. This could be broadened under KORUS or an executive trade agreement to better address the evolving nature of the trade barriers, the targeting of U.S. firms, and “impediments to fair competition.”

Conclusion

The KFTC realizes that the context of its actions has changed and that it is under increased scrutiny. In a February 2025 statement, it noted, “We [the KFTC] are keeping all options open given the uncertainty in the global trade environment.”[32] The United States should use negotiations and the threat of tariffs to persuade South Korea to agree to provisions that address its problematic approach to competition policy. An updated KORUS competition chapter or an executive trade agreement would introduce transparent, predictable, and enforceable safeguards into ROK competition policy to mitigate concerns about bias. Additional commitments through ongoing negotiations would support trade, innovation, and economic growth. This would send a clear signal that U.S. firms receive fair and equitable treatment in South Korea.

Although the language of a USMCA-based solution is straightforward, the challenge is making new commitments enforceable. The United States is likely to look for stronger commitments from the ROK given the history of the KFTC and the further risk of U.S. firms being targeted through enforcement actions and potential legislation. The KFTC’s recent expression of interest in the EU’s Digital Markets Act is unlikely to be forgotten by the United States, given the priority that the Trump administration has placed on these issues. Theoretically, the United States could rely on the good faith nature of Korean commitments in the context of heightened pressure to solve these barriers. However, without an enforcement mechanism, there is no guarantee of success if the KFTC or ROK government finds alternative ways to target U.S. firms in the future.

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Nigel Cory is a Director with Crowell Global Advisors, where he focuses on cross-border data flows, data governance, intellectual property, and how they each relate to digital trade and the broader digital economy. He is also a Nonresident Fellow at the National Bureau of Asian Research.

Robert Holleyman is a Member of the Board of Advisors at the National Bureau of Asian Research. Ambassador Holleyman served as deputy U.S. trade representative from 2014 to 2017 and was responsible for U.S. trade and investment relations in Asia.

NBR is grateful to Michael Beeman, former assistant U.S. trade representative for Japan, Korea, and APEC, and to Sangmin Shim, senior research fellow at the Asan Institute for Policy Studies, for their contributions during the research stage of this brief.

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Endnotes

[1] “USTR Releases 2025 National Trade Estimate Report,” Office of the U.S. Trade Representative (USTR), Press Release, March 31, 2025, https://ustr.gov/about/policy-offices/press-office/press-releases/2025/march/ustr-releases-2025-national-trade-estimate-report.

[2] “South Korea’s Antitrust Push Intensifies under President Lee’s Leadership,” Competition Policy International, June 11, 2025, https://www.pymnts.com/cpi-posts/south-koreas-antitrust-push-intensifies-under-president-lees-leadership.

[3] Park Jae-hyuk, “Next President May Lock Horns with Trump over Online Platform Laws,” Korea Times, May 29, 2025, https://www.koreatimes.co.kr/business/20250529/south-koreas-next-president-may-clash-with-trump-over-online-platform-regulations.

[4] “Trump Blasts EU Regulators for Targeting Apple, Google, Meta,” Bloomberg, January 23, 2025, https://www.bloomberg.com/news/articles/2025-01-23/trump-blasts-eu-regulators-for-targeting-apple-google-meta.

[5] Bradley Dress, “Trump Signs Memo to Impose U.S. Tariffs on Nations with Digital Taxes, Restrictions,” MLex, February 22, 2025, https://content.mlex.com/#/content/1633339/trump-signs-memo-to-impose-us-tariffs-on-nations-with-digital-taxes-restrictions?referrer=content_seehereview.

[6] See the proposed Online Platform Fairness Act; and “Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on Contestable and Fair Markets in the Digital Sector and Amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act),” available at https://eur-lex.europa.eu/legal-content/EN/TXT/?toc=OJ%3AL%3A2022%3A265%3ATOC&uri=uriserv%3AOJ.L_.2022.265.01.0001.01.ENG.

[7] Kim Min-jung and Lee Jae-eun, “Trump Signals Tougher Response to South Korea’s Digital Platform Laws,” Chosun Daily, February 13, 2025, https://www.chosun.com/english/national-en/2025/02/13/FSLXIWUZQRHWPNA3QED35DH2WE.

[8] Joseph V. Coniglio et al., “A Policymaker’s Guide to Digital Antitrust Regulation,” Information Technology and Innovation Foundation (ITIF), March 31, 2025, https://itif.org/publications/2025/03/31/a-policymakers-guide-to-digital-antitrust-regulation.

[9] Sangyun Lee, “Lessons from Korea’s Roller-Coaster Ride toward Platform (Non)Regulation,” Truth on the Market, September 25, 2024, https://truthonthemarket.com/2024/09/25/lessons-from-koreas-roller-coaster-ride-toward-platform-nonregulation.

[10] The KFTC’s own press release, which is available at https://www.ftc.go.kr/www/selectReportUserView.do?key=10&rpttype=1&report_data_no=10360, implicitly acknowledge this point. See also Lee, “Lessons from Korea’s Roller-Coaster Ride toward Platform (Non)Regulation.”

[11] Lilla Nóra Kiss, “Why South Korea Should Resist New Digital Platform Laws,” ITIF, December 9, 2024, https://itif.org/publications/2024/12/09/south-korea-should-resist-new-digital-platform-laws.

[12] “Legislative Approaches to Promote Competition in E-commerce Platform Markets,” Fair Trade Commission (ROK), September 9, 2024, https://www.ftc.go.kr/viewer/synap/skin/doc.html?fn=BBS_202410070920440560&rs=/viewer/synap/preview.

[13] “KFTC Proposes Ex-Ante Regulation of Platforms under the ‘Platform Competition Promotion Act,’” Legal500, January 4, 2024, https://www.legal500.com/developments/thought-leadership/kftc-proposes-ex-ante-regulation-of-platforms-under-the-platform-competition-promotion-act; and Kiss, “Why South Korea Should Resist New Digital Platform Laws.”

[14] Kiss, “Why South Korea Should Resist New Digital Platform Laws.”

[15] Eun-Young Jeong, “Qualcomm Faces $853 Million Fine from South Korea over Alleged Antitrust Violations,” Wall Street Journal, December 28, 2015, https://www.wsj.com/articles/qualcomm-fined-more-than-850-million-in-south-korea-for-alleged-antitrust-violations-company-to-fight-decision-1482894283.

[16] Lee Gi-woo and Lee Jung-soo, “KFTC’s Two-Year YouTube Music Investigation Continues, Hurting Local Services,” Chosun Daily, February 19, 2025, https://www.chosun.com/english/industry-en/2025/02/19/6MDRXW27X5DQVLC4KV7M2PFKO4.

[17] Hyunsu Yim and Heekyong Yang, “South Korea Fines Google $32 Mln for Blocking Games on Competing Platform,” Reuters, April 11, 2023, https://www.reuters.com/technology/south-korea-fines-google-32-mln-blocking-release-games-competitors-platform-2023-04-11.

[18] Heekyong Yang, “S. Korea Fines Google $177 Mln for Blocking Android Customization,” Reuters, September 14, 2021, https://www.reuters.com/technology/skorean-antitrust-agency-fines-google-177-mln-abusing-market-dominance-2021-09-14.

[19] Julie Masson, “Apple Faces Criminal Charges for Obstructing Probe in Korea,” Global Competition Review, March 31, 2021, https://globalcompetitionreview.com/article/apple-faces-criminal-charges-obstructing-probe-in-korea.

[20] Charles McConnel, “Korea Accepts Apple’s Investment Promise to End Abuse Probe,” Global Competition Review, February 4, 2021, https://globalcompetitionreview.com/article/korea-accepts-apples-investment-promise-end-abuse-probe.

[21] Lee Hyun-seung, “Geomchal, ‘algolijeum jojag’ Kupang bonsa absususaeg” [Prosecutors Raid Coupang Headquarters for ‘Algorithm Manipulation’], Chosun Biz, November 12, 2024, https://biz.chosun.com/topics/law_firm/2024/11/12/L2O5EVPYZBFEPO6OIWJJPIPQY4.

[22] Kim Min-jung, “Coupang Challenges KFTC over Unfair Trade Practices Fine in Latest Legal Battle,” Chosun Daily, April 11, 2024, https://www.chosun.com/english/industry-en/2024/04/11/PIFBCVPHIVACPMO5XRJLMYAJKI; and Sang Oh Jeon et al., “Trends in Antitrust Enforcement and Litigation in South Korea,” Yoon and Yang, September 19, 2024, https://practiceguides.chambers.com/practice-guides/antitrust-litigation-2024/south-korea/trends-and-developments.

[23] Kim Min-jeong, “Korea’s Fair Trade Commission Investigates AI Data Practices of Meta, Naver, Kakao,” Chosun Biz, March 11, 2025, https://biz.chosun.com/en/en-policy/2025/03/11/WCZOTUNUKBAF3HSC22HGKNMN4I.

[24] Jon Porter, “Apple Lets Apps in South Korea Use Third-Party Payment Systems,” Verge, June 30, 2022, https://www.theverge.com/2022/6/30/23189384/apple-south-korean-app-store-third-party-payment-systems-in-app.

[25] Bradley Dress and Mike Swift, “USTR Digital Trade Barrier Claims a Concern, South Korean Official Says,” MLex, April 25, 2025, https://content.mlex.com/#/content/1649424/ustr-digital-trade-barrier-claims-a-concern-south-korean-official-says?referrer=search_linkclick.

[26] “CCIA Comments on Korea’s Revision of Notice on Security Certification of Cloud Computing Services,” Computer and Communications Industry Association, February 26, 2024, https://ccianet.org/library/ccia-comments-on-koreas-revision-of-notice-on-security-certification-of-cloud-computing-services.

[27] “Miller Introduces U.S.–Republic of Korea Digital Trade Enforcement Act,” Office of Carol Miller, Press Release, September 27, 2024, https://miller.house.gov/media/press-releases/miller-introduces-us-republic-korea-digital-trade-enforcement-act.

[28] “USTR Pursues Competition-Related Concerns under the U.S.-Korea Free Trade Agreement,” USTR, Press Release, July 9, 2019, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/july/ustr-pursues-competition-related.

[29] The full text of Article 16.1 is available at https://ustr.gov/sites/default/files/uploads/agreements/fta/korus/asset_upload_file193_12715.pdf.

[30] “USTR Pursues Competition-Related Concerns under the U.S.-Korea Free Trade Agreement.”

[31] USTR, “2025 National Trade Estimate Report on Foreign Trade Barriers of the President of the United States on the Trade Agreements Program,” 2025, 252, https://ustr.gov/sites/default/files/files/Press/Reports/2025NTE.pdf.

[32] Kim and Lee, “Trump Signals Tougher Response to South Korea’s Digital Platform Laws.”