South Korea braces for regulatory recalibration after ex-President Yoon's exit

April 9, 2025, 07:35 GMT | Comment President Yoon Suk Yeol’s dramatic downfall earlier this month — ousted by the Constitutional Court for declaring martial law in what it called a “betrayal of democratic principles” — has upended South Korea’s policy trajectory, setting the stage for a snap presidential election that could mark a turning point in how the country regulates its digital economy.

For nearly three years, Yoon’s conservative administration walked a fine line between expanding oversight of Big Tech and preserving room for innovation.

But with the Democratic Party holding a commanding majority in the National Assembly and polling strongly ahead of the June 3 vote, momentum is building for a more aggressive agenda. A Democratic-led government is expected to bring not just new personnel, but also a firmer grip on how markets are policed, tightening rules and ramping up accountability across platform governance, AI oversight and data privacy.

Timelines for pending legislation are now in flux, and regulators are bracing for shifts in direction. The fate of key policy efforts — from curbing platform monopolies to setting guardrails around high impact AI — hinges on a high-stakes political battle between emboldened progressives and conservatives racing to preserve influence, and on just how far the next administration is willing to go in rewriting the rules.

— Policy pause before the pivot —

Yoon's unconstitutional martial law declaration and abrupt departure have left a power vacuum at the top of the executive branch. Prime Minister Han Duck-soo has assumed the role of acting president but is expected to take a cautious caretaker approach in the run-up to the election, avoiding major policy moves.

The political fallout is also playing out in the legislature, where the National Assembly's conservative bloc is grappling with internal tensions and the Democratic Party is consolidating power and seizing the momentum ahead of the vote.

Several candidates from the conservative People Power Party have either declared or are preparing to announce presidential bids, but the party has yet to unify behind a single figure. In contrast, the Democratic Party has quickly rallied behind Lee Jae-myung, who is poised to launch his campaign soon. Lee, who narrowly lost to Yoon in the 2022 election, enters the race as the presumptive frontrunner.

A potential Lee presidency, combined with the Democratic Party’s supermajority in parliament, would trigger a significant shift in South Korea’s governance approach. Such political alignment is likely to accelerate regulatory initiatives across key sectors, reshaping the pace, tools and priorities of enforcement. Regulatory agencies could be steered to put greater weight on regulatory aspects, departing from the more business-friendly tone that defined the Yoon administration.

— A shift to ex-ante controls? —

The starkest contrast between the two parties is over how to deal with platform monopolies.

Yoon’s administration backed revising the existing Monopoly Regulation and Fair Trade Act (see here). That bill, largely drafted by the Korea Fair Trade Commission, or KFTC, proposed presumptive dominance thresholds and new interim measures but stopped short of introducing the kind of ex-ante rules found in the EU’s Digital Markets Act. Under Yoon, the KFTC opted for speedier ex-post enforcement rather than sweeping structural regulation.

The Democratic Party, by contrast, has signaled support for new platform-specific legislation. Several of its lawmakers, notably Kim Nam-geun, have proposed bills that go beyond market abuse thresholds and seek to directly prohibit behaviors like self-preferencing, tying and algorithmic opacity among large digital platforms (see here). Their draft rules would introduce designation mechanisms for dominant operators and preemptively ban certain conduct — an approach much closer to the EU model. They explicitly aim to address market power abuse by both domestic firms like Naver, Kakao and Coupang and foreign players such as Google and Apple.

If a Democratic Party-aligned president takes office in June, these bills would significantly improve their chances and could even move forward with speed. The KFTC, for its part, could receive political clearance to pivot toward this ex-ante model.

However, with the US government under President Donald Trump identifying South Korean platform legislation as trade barriers disproportionately targeting US-based firms (see here), international pressure, such as potential retaliatory tariffs or other trade measures, could complicate the legislative process even as domestic political shifts improve the prospects for these bills.

— Strategic restraint, steady groundwork —

As for broader antitrust enforcement, a major shift in direction is unlikely in the short term. With the KFTC operating as a semi-independent agency under existing statutes, the regulator, under current Chairman Han Ki Jeong, is expected to move cautiously in the run-up to and after the election, steering clear of actions that could be seen as politically sensitive or diplomatically provocative.

Still, enforcement won’t grind to a halt. MLex understands that the KFTC is pressing ahead with new case development, especially in emerging areas such as AI — building on its AI policy report released last December (see here). The regulator has also commissioned studies on data-driven conduct and novel merger structures (see here and here), signaling a steady, methodical approach to enforcement even amid political uncertainties.

At the same time, the KFTC is proceeding with existing cases, including one involving alleged “most-favored nation” clauses by delivery apps and another involving alleged collusion in the government bond market (see here and here). And while headline-grabbing action against US tech giants may be off the table for now — largely due to trade sensitivities with Washington — that stance could possibly change once a new president and KFTC chair are in place.

One test case already on the commission’s agenda involves Google’s YouTube Music, which is awaiting deliberation by KFTC commissioners over alleged tying (see here). While the timeline remains unclear, the case could signal how far South Korean enforcers are willing to go in taking on global platforms amid growing US pressure — a calculation unfolding behind closed doors.

— Quiet continuity on data privacy —

South Korea’s privacy regulator, like the KFTC, operates with relative independence, and its core mission — enabling responsible data use while safeguarding privacy — enjoys broad bipartisan support. As a result, the country’s data protection framework and many initiatives of the Personal Information Protection Commission, or PIPC, are unlikely to undergo major changes.

Under the Yoon administration, the PIPC focused on creating a regulatory environment that would help South Korean businesses harness high-quality datasets to stay competitive in a data-driven world.

“The PIPC has faithfully carried out its mission to protect personal data while enabling its use for technological development, regardless of the administration,” said Yoon Jong-in, former PIPC chairman under the previous liberal Moon Jae-in government and current policy advisor at Shim & Kim. “It depends on how the new administration sets its direction, but given the importance of both data use and protection, I don’t foresee any major changes.”

An example for a continued initiative is the amendment to the Personal Information Protection Act, drafted by the PIPC and submitted under the names of Democratic Party lawmakers on Jan. 31. The bill is expected to continue moving through the legislative process, unaffected by the change in administration. It may even gain momentum if the next president is elected from the Democratic Party.

The bill will allow businesses to use original data without having to pseudonymize or anonymize it, provided they secure approval from the PIPC for their data processing and management plans.

— AI governance —

The next administration will most likely maintain or step up its stance to support the ambition of helping the country stay in the leading group of nations in AI innovation, with the Democratic Party of Korea seen as more aggressive in increasing fiscal spending on the sector than the People Power Party.

South Korea has long boasted that it is one of only a few countries with its own artificial intelligence ecosystem — encompassing talented researchers, hardware makers, model and application developers, and innovation-adaptive consumers — but a sense of urgency has been growing rapidly in recent weeks.

This urgency is attributable in part to the fact that the then-ruling party lacked a majority in the parliament and more recently to Yoon’s impeachment. However, his administration had already been criticized for cutting spending on AI research and development under its controversial stance of prioritizing fiscal prudence at a time when the economy and AI sector needed the opposite stance.

If the Democratic Party of Korea wins the election, as most opinion polls indicate it will, its overwhelming control of both the administrative and legislative branches will likely strengthen government support for the development of the AI industry, at least based on recent remarks by party members.

Meanwhile, the incoming government is also widely expected to write subordinate decrees and rules for the framework law on AI in such a manner as to ease concerns among AI businesses that some of the law’s provisions could end up imposing too many restrictions on them.

While the government has repeatedly said the AI law — to be implemented from late January 2026 — is heavily in favor of promoting AI innovation, many AI businesses and law experts have said the law could suppress innovation unless decrees drastically limit the targets for various requirements.

The Democratic Party has yet to announce or set its stance on the sub-decree provisions of the AI Basic Law. However, the party could wield significant legislative power to revise the law in response to evolving circumstances.