No More Squid Game: Chaebols, South Korea, and a Complicated Relationship with Net Neutrality

Nov 9

Nov 9 No More Squid Game: Chaebols, South Korea, and a Complicated Relationship with Net Neutrality

On September 29th, Twitch Korea issued a surprising press release. Inside, it detailed that starting September 30th, streams would be locked to 720p due to the increasing “cost of operating Twitch services in South Korea.” The announcement prompted outrage from many content creators across numerous platforms, who spoke out against the unexpected decision. For seemingly no reason, there would be further resolution cuts at a time when Twitch had come under scrutiny thanks to their recent revenue-splitting decisions. However, with a closer look, the decision in Korea was not part of recent Twitch austerity measures, but a complicated process that has been years in the making with deep-seated issues that could have international ramifications.

Before considering the loss of net neutrality that has occurred recently in South Korea and its wider impacts on the world, it is necessary to dissect and understand it. For example, in the United Kingdom, energy bills are paid by the amount of energy used rather than a fixed rate over the course of the month. Unlike the way that energy bills work, internet contracts with telecom companies are billed at a fixed rate. A certain amount is paid per month, and in exchange, there is no cap on data used and free access is granted to all sites. This last factor is the main tenet of net neutrality, whereby accessing websites, programs, or other content on the internet is neutral and holds no additional cost.

In Korea, however, net neutrality is directly under threat thanks to new legislation passed under the new government of Yoon Suk Yeol. South Korea is a state which has an economy dominated by companies known as ‘chaebols.’ Literally meaning “wealth clan,” 44% of South Korea’s 2019 GDP was from these, with Samsung contributing a total of 14% of the total Korean GDP itself. As can be imagined, therefore, these companies have incredible influence domestically, and their CEOs and other influential executives been the subject of many scandals due to corruption. The market for internet is dominated by these chaebols, as KT corporation, SK Broadband, and LG U+ form a pseudo-oligopoly, being the providers for over 90% of South Korea’s internet users.

Since early 2018, SK Broadband (SKB) has been embroiled in a legal battle with Netflix. Thanks to the increased traffic surge due to the hit Netflix show ‘Squid Game’ in 2021, the legal battle re-emerged, as SKB has claimed that Netflix has an obligation to pay due to the ‘heavy usage’ on their networks. Losing the initial lawsuit and facing payments of more than $22 million for 2020, Netflix appealed the ruling, with the Seoul Central District Court ruling that it is “reasonable” for Netflix to be “obligated to provide something in return for the service” SK provided. Moreover, President Yoon Suk Yeol’s party, the Korean People Power Party (PPP), has now taken aim at Netflix. Legislation has been made to target these foreign firms by members of the PPP under the guise of economic nationalism, with claims of Korean “national wealth” leaking abroad. The Korean telecoms oligopoly has been able to push down on Korean service providers, with help from the Telecommunications Business Act and its revisions. However, the fact that nearly 80% of internet traffic is from foreign companies has made revisions seem necessary in the eyes of over 70% of Koreans, which the bill’s recent revisions has changed.

How has this impacted the world? The United States continues to maintain a complicated relationship with net neutrality, which was reignited in 2017 thanks to the Trump-appointed FCC Chair Ajit Pai. At the same time, the broadband industry founded a non-profit lobbying organisation to generate support for the plan, spending over $4.2 million for a plan that gutted net neutrality and the FCC with it. Moreover, President Biden’s FCC Chair appointment to replace Pai and re-instate net neutrality laws remains in limbo thanks to Rupert Murdoch and the CEO of Comcast, among others. The results of the 2022 midterm elections will undoubtedly impact any future appointment as well. As such, the U.S. government’s plans to expand rural broadband and reinstate net neutrality hangs in the balance, and most likely will remain incomplete.

In the UK, similarly, Ofcom has proposed that net neutrality be scaled back due to ‘harming innovation’ from Internet Service Providers, as well as the fact that it would provide ‘price cuts’ for consumers. Moreover, European telecoms companies are looking at emulating the South Korean model. Even with net neutrality being blocked as a part of EU laws, the telecom companies are seeking to make companies like Google, Meta, and Netflix bear the cost of networks being used. EU telecom regulator BEREC made a report that “operators’ network costs are already not fully covered and paid for in the Internet value chain” despite conflicting claims from other telecom companies.

Ultimately, internet users must remain vigilant and not allow for these changes to occur. A world in which telecoms companies feel free to demand additional costs from tech companies is a terrifying one, as it means that consumers will suffer. Indeed, global norms which have existed for decades are under threat thanks to the greed of telecom corporations. Net neutrality has been at the core of the internet since its inception and must remain that way for the internet to remain free.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the wider St. Andrews Foreign Affairs Review team.