Korea’s New Fairness Act Risks Chilling Innovation and Derailing Trade Talks

After facing U.S. backlash over the Platform Monopoly Act (PMA)—a bill modeled on the EU’s Digital Markets Act and seen as targeting American tech firms—South Korea appeared to pause its digital antitrust push. But rather than stepping back entirely, the government has shifted focus to the Online Platform Fairness Act, which may prove even more intrusive. Despite earlier assurances of caution, the Korea Fair Trade Commission (KFTC) is now fast-tracking the bill, just as Korean and U.S. officials prepare to meet in Washington tomorrow.

This looks like a classic bait and switch. Korea proposed two discriminatory bills, then paused the obvious one after U.S. pushback while quietly advancing the other. United States officials should not be hoodwinked: If a country proposes an extreme measure, then replaces it with an equally harmful policy while calling it a compromise, that’s not moderation. The Fairness Act is the same attack in different packaging.

There are several important points to note with the Fairness Act. First, unlike the PMA, which focused on the largest platforms, the Fairness Act casts a wider net, encompassing a broader set of intermediaries based on quantitative thresholds combined with a subjective “superior bargaining position” test. Not only does this risk Korea creating barriers to entry that stifle the growth of smaller digital firms, but the qualitative criteria of the superior bargaining test appear to grant the KFTC wide discretion. This leads to regulatory uncertainty and opens the door to targeted attacks on American firms like Apple, Coupang, or Google—mirroring the risks associated with the PMA.

This regulatory uncertainty appears to be a deliberate non-tariff attack tactic. Vague qualitative criteria for designating an intermediary as having a “superior bargaining position” could enable selective enforcement against U.S. companies, while providing the plausible deniability needed to evade trade scrutiny.

Second, the Fairness Act risks fundamentally reshaping Korea’s digital economy through direct government intervention by capping platform commissions and banning perceived “discriminatory” transaction terms. Such measures distort market incentives and penalize successful, often American, platforms for standard commercial practices. Rather than fostering competition, the Fairness Act risks deterring innovation and investment, outcomes that Korean consumers are unlikely to welcome.

Third, the Fairness Act could further strain U.S.-Korea trade ties, which are already under pressure from recent tariff escalations. By enabling direct regulatory targeting of U.S. digital firms, the Fairness Act raises concerns over discriminatory treatment and market access. Indeed, the United States has signaled its readiness to push back through proposals like the U.S.-Korea Digital Trade Enforcement Act, designed to confront discriminatory digital regulations.

As such, the timing couldn’t be worse for U.S.-China competition. Korea’s measures weaken American tech platforms just as both allies need to counter China’s digital expansion. Chinese competitors are positioned to exploit any gaps created by restrictions on U.S. firms. By advancing the Fairness Act during trade talks in Washington, Korea signals it prioritizes misguided tech regulations over strengthening the tech alliance needed to compete against China.

New digital regulation should be justified by clear market failures, which Korea’s dynamic platform economy does not exhibit. Rather than imposing a novel regulatory regime—whether through the PMA or the Fairness Act—South Korea should stick to what already works: targeted enforcement under existing competition law, which the KFTC has successfully used to bring actions against firms such as Google, Qualcomm, and Coupang. These discriminatory platform rules are non-tariff attacks that will ultimately harm Korean consumers and the broader economy.

With Korean trade officials in Washington this week, Seoul has a chance to recalibrate. The United States should make clear that discriminatory regulations targeting American tech companies will be treated as trade violations. Pausing the Fairness Act and recommitting to transparent, case-by-case enforcement would be the right first step.