South Korea Risks Economic Self-Sabotage With $1 Trillion Crackdown On US Tech Giants

For those who don’t know, South Korea is big on extracting money from Big Tech firms in the United States – a protectionist tactic similar to China – aimed at curbing the dominance of global tech platforms when it comes to social media, search, e-commerce and app stores, while favoring domestic players such as Naver, Kakao and Coupang. 

The Korea Fair Trade Commission (KFTC), which enforces laws pertaining to antitrust and competition, has repeatedly targeted US firms. In 2021, it fined Google $177 million for anti-competitive practices in Android licensing, alleging it abused its dominance to restrict competitors. That same year, Korea became the first country to prohibit Apple/Google from requiring developers to use only their in-app payment systems; both firms adjusted policies, and regulators later warned/fined over compliance issues. 

In 2023, Apple faced a $22 million fine for similar app store policies that limited developers’ access to alternative payment systems. More recently, in 2024, the KFTC launched probes into Amazon and Google over alleged preferential treatment in online advertising and search results, which could disadvantage Korean firms.

On top of this, they want US tech firms to disclose algorithms and prevent self-dealing, with penalties of up to 3% of global revenue for noncompliance. 

In a Wednesday interview with CNN, South Korea’s President Lee Jae-myung tried to tamp down concerns over the trade rift – referring to Donald Trump as a “peacemaker” right before his scheduled trip to Asia. 

“We have different ideologies and also a different system of government… (but) we cannot shut out China,” Lee said, adding that the “vital” US alliance has made managing their bromance with Beijing “a bit delicate.” 

“When it comes to relationships between countries, you cannot cut it clean with a knife and say: ‘This country is our friend, and this country is not.’ It’s just not that simple – it’s much more complicated and complex,” said Lee. 

Shooting Themselves In The Foot

A new report by the Competere Foundation contends that Korean competition and digital-market policies coming out of the KTFC could result in a combined $1 trillion in economic losses over the next decade, including $525 billion for the U.S. and $469 billion for South Korea. The group argues that tighter controls on global tech firms such as Apple, Google, Microsoft, and Coupang are “discriminatory” and risk chilling innovation and foreign investment

“Ironically, while Korean officials are working to prevent U.S. companies like Apple, Coupang, Google and Microsoft from operating freely, our research shows Korea itself will lose an estimated $469 billion over 10 years, including significant damage to the country’s small businesses,” said Shanker Singham (no relation to Roy) – president of the Competere Foundation, in a statement to Fox Business.  

The foundation – whose research focuses on non-tariff barriers and competition policy – links the projected losses to reduced foreign direct investment, higher compliance costs, and lower digital productivity. It cites related studies by the Information Technology and Innovation Foundation (ITIF) and the Southeast Asia Public Policy Institute (SEAPPI) suggesting that heavier platform regulation across the Asia-Pacific could raise annual compliance costs by more than $3 billion, with roughly $512 million of that in South Korea alone.

“These actions by Korean officials are stalling the ability of U.S. companies to operate freely and disincentivizing them from investing in South Korea,” said Henry Haggard, former minister counselor for political affairs at the U.S. Embassy in Seoul, who agreed that Korea’s regulatory approach risks backfiring – and warned that some US firms may scale back operations in the country, halt future investments, or exit the country completely. 

This year, the KTFC proposed interoperability regulations in February imposing data-sharing mandates on platforms, drawing U.S. concerns over disproportionate impacts on American firms like Google and Apple.

This year alone: 

• In March, the Information Technology and Innovation Foundation (ITIF) slammed South Korea’s shift from “fast follower” to restrictive regulator – warning that it would stifle innovation amid US tariff threats. 
• In May, US tech giants (Goole, Apple, Meta) ramped up lobbying against South Korea’s Monopoly Regulation and Fair Trade Act (MRFTA) – alleging it favors Chinese firms while targeting US players. 
• In June, the United States Trade Representative raised the antitrust legislation in trade talks, urging Seoul to halt over a dozen platform regs. New President Lee Jae-myung, however doubled down on tech oversight. 
• In July, US-Korea tariff negotiations stall over the matter.
• In August, bipartisan US lawmakers demand a briefing on Koreas’ anti-US-tech regulations, warning of economic and strategic risks from ‘EU-copycat’ laws. 
• In September, President Donald Trump threatens tariffs over Korea’s “pro-China” regulations; exempting TikTok’s ByteDance while probing US firms.

As noted in the list above, the timing of the Competere report coincides with renewed negotiations between Washington and Seoul over tariffs and digital trade provisions. Yet according to Competere, “reforms to Korea’s regulatory culture” could become a bargaining chip in efforts to lower U.S. tariffs on Korean exports. 

That said, South Korean regulators show no signs of backing down.