Seoul is reining in tech giants Kakao and Naver to save small business — but it might be too little, too late. From a report: South Korea has left hard cash in the dust. The country is a virtually friction-free, digital payments dream, where just a fraction of purchases are done in notes and coins. Park Se-hwa’s bookstore, on a commercial street in Seoul, is a holdout. Inside the narrow door, a sign reads: “The best way to support the bookstore is to pay cash.” She bristles every time she processes a purchase by card, since it means she has to pay a fee to the bank, taking a slice out of the already thin income she brings in from book sales. Park refuses, on principle, to use payments services from local tech giants like KakaoPay or Naver Pay. She won’t build a platform on Amazon, the e-commerce behemoth that built itself up by reinventing the publishing world. “Those big companies are the public enemy of booksellers,” she said. Park, 31, has operated her bookstore for a little more than a year. Her first vocation out of college was in the national Air Force, working seven-hour shifts monitoring radar for signs of North Korean missile launches. She started again as an entrepreneur after spending years in a series of unfulfilling jobs, like an increasing number of young, educated Koreans.
With South Koreans’ buying activity moving almost entirely online, and the margins of small businesses contracting, she worries that the texture is disappearing from Seoul’s streets. “If you look in any new area, it’s always just chain stores that open, the same corporate convenience stores and coffee shops. Independent stores can’t compete with them,” she told Rest of World. Park may seem an anomaly, but she isn’t. Her fears reverberate as high up as South Korea’s lawmakers and its steely antitrust commission, who have spent this year attempting to rein in the country’s vastly powerful tech giants. Kakao and Naver, both multibillion-dollar, publicly-traded empires, are the main targets: They have rapidly expanded their tentacles into South Koreans’ digital lives in a way that uncomfortably mirrors the country’s previous generation of conglomerates, like Samsung and LG. The government worries that their growth is coming at the sacrifice of the country’s small businesses, who they say are being crushed with fees and impossibly high levels of online competition. Over the second half of this year, the battle with regulators has intensified. Both Naver and Kakao recently backpedalled on plans to expand their fintech services when the Financial Services Commission abruptly tightened standards. As the companies’ jitters mounted, KakaoPay twice delayed its plans for a stock debut, infecting potential investors with concern. A total of eight different bills, proposed by lawmakers from both main parties, are pending in the legislature. They look to impose stricter standards on what kinds of fees online platforms can charge users, how much they can charge advertisers, and other measures intended to rein in their growth.