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The world should cheer South Korea's battle against Big Tech

Seoul's Google smackdown draws ironic road map for the global economy

| South Korea
Moon Jae-in should pivot immediately to take on monopolistic behavior.   © Reuters

William Pesek is an award-winning Tokyo-based journalist and author of "Japanization: What the World Can Learn from Japan's Lost Decades."

The irony was the 800-pounder in the room as South Korea slapped Google with a $177 million fine for monopolistic behavior.

Tech giants have, after all, amassed oligarchic wealth and power by following the Korean model: a small cluster of ginormous, diversified, politically savvy conglomerates at the center of an economic universe orbited by all else.

Who would argue with a straight face that Alphabet's Google, Amazon, Apple, Facebook and Microsoft do not run America, and that Washington politicians just live there? But nowhere is this dog-wagging-tail problem more pervasive than in South Korea.

First let us say: Well done, President Moon Jae-in. Pundits are wrong to connect dots between Seoul's regulatory broadside this week and President Xi Jinping's war on China's rich. Xi's whack-a-mole smacks more of an economic version of Mao Zedong's Cultural Revolution than a win for the little guy.

Google's 80% global share of smartphone operating systems is a particular Korean concern in light of Samsung's extreme dominance in high-end handsets. Still, Seoul complaining that Google freezes out competitors in a market known as the Republic of Samsung? Oh, the irony!

Google's 80% global share of smartphone operating systems is a particular Korean concern.   © Reuters

That said, this individual Google fine is less important than a law South Korea's parliament approved last month curbing the payment policies of Big Tech players like Apple. Tech giants had forced developers to use their proprietary billing systems -- demanding commissions as high as 30% per transaction. Cue the Tony Soprano metaphors.

South Korea is the vanguard of nations waging a David-and-Goliath battle that the U.S., Europe and others must join. It finds itself in the global spotlight for two reasons. One, a solid COVID-19 response put South Korea on a path to recovery faster than other top-12 economies. Two, it is at the center of supply-chain dramas plaguing corporate boardrooms everywhere.

With Samsung one of the world's two biggest semiconductor makers, this explains why Moon's visit to President Joe Biden's White House in May was more about electrical conduits than Kim Jong Un. Ford and General Motors once drove the U.S. economy. Now, Detroit executives spend their days hoping calls to South Korea get returned.

The world should be rooting for South Korea's stance against Big Tech. Otherwise, the self-reinforcing, market-conquering ways of a handful of behemoths getting bigger and hoovering up startups that might impede their reach will intensify.

There was little pearl-clutching in Seoul when we learned that Facebook founder Mark Zuckerberg, in a 2008 email, argued that "it is better to buy than compete." This is, after all, the way of chaebol, or family-controlled conglomerate, and why South Korea's huge and vibrant startup scene soon hits a wall of family-owned dynasties protecting their turf.

Jeff Bezos routinely touts the disruption emanating from his Amazon's marketplace platform. Yet small-and-midsize businesses selling goods via the globe's premiere logistics network could be deleted at any moment -- or eclipsed by Amazon making its own version of a product.

Conglomerated South Korea was well ahead of him. And yet, chaebols are safe again as Moon's government becomes the latest to bow to the family giants Seoul should be policing.

Moon was elected in 2013 pledging to level playing fields and champion a new trickle-up growth model. Just like his predecessors, though, Moon shuddered at taking on the ultimate vested interest. Look no further than Samsung Electronics leader Lee Jae-yong getting paroled last month.

It was a mistake to bow to pressure to return Lee to his office on economic grounds after he was jailed for his role in the bribery scandal that got Moon's predecessor impeached and imprisoned. A pattern? In 2018, when Lee walked free before being ordered to face a retrial, Moon brought him to Pyongyang to highlight the wonders of capitalism to the North Koreans. Crime pays if you run a chaebol.

If Moon wants to have an economic legacy, he must use the 174 days between now and the Mar. 9 election to put some big reforms on the books. This week's Google penalty is a good place to start.

Moon should pivot immediately to take on monopolistic behavior. Economic activist Naomi Klein warns of a "pandemic shock doctrine," whereby Big Tech harnesses COVID-19 chaos to permanently embed its platforms in core government functions. South Korea is Exhibit A for this need to disentangle the public and private sectors that.

The key for South Korea is creating more economic oxygen for startups. They need room to disrupt, thrive and evolve into 1,000-employee companies and then 10,000-employee game-changers. This requires tightening antimonopoly laws, policing the giants via tax changes, including levies on super profits, and growing the size of the venture capital universe.

Seoul could incentivize new companies taking risks, empowering women, harnessing meritocratic hiring and promotion systems, putting innovative services over exports and championing sustainability values. Anything to wrestle power away from the legacy giants. After all, they had their chance to play fair.

All this is a stark reminder of South Korea's status quo. Its 50 million people like to think BTS and other K-pop sensations are their catchiest export. In reality, it is a chaebolization trend that even South Korea has yet to tame.

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