Seoul does not have Beijing’s crackdown muscle

South Korea’s recent actions against foreign internet giants and local upstart parallels the recent raids in China. In reality, little suggests that Seoul has the power or the desire to hit big corporations.

Both Apple Inc. and Google of Alphabet Inc. were at the end of the wrath of South Korean law last month due to a new antimonopoly law that bans companies from forcing software developers to use the payment platforms tied to their app stores. The legislator ordered users to have a choice. (A similar debate unfolded in a US court.) Separately, Google was also recently fined $ 177 million for preventing device manufacturers such as Samsung Electronics Co. and LG Electronics Inc. from making versions of the omnipresent. of the US company to develop or modify Android operating system.

Western giants aren’t the only ones mastering it. Cocoa Corp. and Naver Corp., the nation’s largest internet and messaging providers, have been pilloried by lawmakers, antitrust and tax authorities for a number of alleged sins, including market dominance, stock market ratings and fintech product offerings. While their products are ubiquitous in Korean society, the companies behind them lack the size and power that their counterparts in China or even the US enjoy, which are also under attack.

However, actual allegations and charges were sparse, so companies had to try to clear their names from public opinion in court. One such leader who succumbed to the pressure is Brian Kim, founder of Kakao and a symbol of South Korea’s new wave of technology leaders who are shunning traditional hardware businesses for high-growth software, internet and social media. On Tuesday, he pledged 300 billion won ($ 256 million) to help small traders while he considers getting out of sectors that compete with mom and pop stores. “The recent criticism is a powerful alarm bell for cocoa,” Kim wrote in a statement that included contrite catchphrases such as “social responsibility” and “fundamental change.”

China watchers will be familiar with the script. In April, the e-commerce powerhouse Alibaba Group Holding Ltd. wrote that the company “would not have achieved our growth without solid government regulation and good service.” A $ 2.8 billion antitrust fine had just been imposed, while the shock of its fintech subsidiary Ant Group Co.’s canceled IPO reverberated six months earlier. Education, gaming, ridesharing and social media providers have been in the government’s crosshairs for the past six months as President Xi Jinping brings the private sector under the mantra of “shared prosperity,” aiming to tackle inequality across the region Country. To show that they are on board and land in Beijing’s benevolence, companies and individuals have teamed up to donate more than $ 35 billion to charities and support small businesses.

There does not seem to be a similar overarching social goal in South Korea. But the presidential elections are due in March and the primaries are in full swing. And lawmakers are eager to make headlines when they stand up for the little guy like they do in any democracy. In South Korea, a country dominated by a few powerful corporations, waves of socialist fervor roll in from time to time.

But compared to the reach of Chaebol, Naver, Kakao, and affiliates like KakaoBank Corp. mere minnows. Samsung Electronics’ sales of $ 201 billion last year were more than double that of nearest competitor Hyundai Motor Co., ahead of conglomerate SK Inc. and LG Electronics. Two of them, Samsung and LG, will be the main beneficiaries of this tougher stance on overseas tech giants.

It’s not that Seoul was in a hurry to tame the big names anyway. It seems like a powerful coincidence that the free election law passed in August came at just the right time when Google wanted to lift the country’s long-standing fee exemption, which means it would charge the same 30% commission on apps collected elsewhere. And just two weeks after it was signed by the National Assembly, a longstanding dispute in the US between Epic Games Inc., best known for its Fortnite titles, and Apple came to a head. In this case, a federal judge ruled that the iPhone maker engaged in anti-competitive behavior by preventing consumers from using third-party payment methods for mobile apps.

But it’s much easier to criticize fast-growing young companies with unassailable ratings than it is to tackle entrenched interests with deep political ties. Jay Y. Lee appeared to be the figurehead of South Korea’s crackdown on the powerful when the scion of the Samsung empire was found guilty of bribery, but he left prison a year early after being paroled last month. (Then-President Park Geun-hye was charged and detained as part of the same investigation.)

The simple truth is, regulators and lawmakers haven’t adopted big names like Xi, nor have they had nearly the same influence. Cocoa market value reached $ 65 billion before all the grudges slumped the stock by 37%. In contrast, Alibaba was valued at nearly $ 860 billion, with Beijing’s crackdown helping to cut that value in half.

Xi’s China is generally far less lenient and far more willing to deal with the biggest names, no matter how fast they grow or what innovations they bring. If anything, the raid in Seoul shows how different South Korea is from China, and perhaps the country should embrace it.

Tim Culpan is Bloomberg Opinion’s columnist on technology.

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