Kwon Yeongin's Problematic Europe: Alibaba Fined 1 Trillion Won, Google 1.5 Trillion Won... Europe's 'Isolationist Policy' That Would Make Heungseon Daewongun Weep

00:00 Intro

00:24 "1 Trillion Won for Selling Toys?"... EU Strikes Alibaba

01:36 Fuming China: "Building Digital Barriers"

04:01 No Exception for the U.S. Either... From Google, Apple to Meta

05:40 Europe's Version of 'Isolationist Policy'... Why There Is No YouTube

This is Paris. Today, we are going to talk about war, specifically trade wars. Europe is currently a literal battlefield. While an actual war is raging in Ukraine, trade and economic wars are also being fought left and right. Although there are no guns and swords, the atmosphere feels truly fierce and desperate.

1. "1 Trillion Won for Selling Toys?"... EU Strikes Alibaba

This week, the EU slapped Alibaba with a fine. It amounts to 550 million euros, which is over 900 billion won in our money. Depending on the exchange rate, it is close to 1 trillion won. The reason stated by the EU is as follows: AliExpress sold unsafe children's toys, harmful cosmetics, and illegal and counterfeit goods to European consumers. It added that while these products are being distributed on a massive scale, the company has failed to take sufficient measures. The EU also made public a specific piece of evidence. It stated that internal documents from Alibaba showed the company itself was aware that 15 million items in the European market were improperly or illegally recommended. Nevertheless, it failed to secure a sufficient inspection workforce, and existing personnel were so overworked that they could not properly filter them out. Consequently, a fine close to 1 trillion won was imposed. The law applied here is called the Digital Services Act, or DSA. This law, enacted in 2022 and enforced in 2023, has now resulted in the largest fine ever levied. At first glance, one might wonder if the issue warrants such a scale.

2. Fuming China: "Building Digital Barriers"

China immediately fired back. First, Alibaba protested that it had made efforts to filter out problematic products, but Europe ignored those efforts. It stepped up to appeal and fight legally. The Chinese government was also infuriated. The Ministry of Commerce issued an official statement saying, "We are very dissatisfied with this fine and express our solemn concern." And this point is crucial. It criticized Europe for building "digital barriers" in the European market under the pretext of monitoring and supervising platforms. As I mentioned, the law applied this time is the DSA. To briefly explain this law first, DSA stands for the Digital Services Act, which roughly translates to the 'digital consumer act' in Korean. It is a law designed to protect consumers suffering from online shopping damages and to protect people victimized by social networking services, fake information, and personal data leaks. However, since the inception of this law, not only Alibaba but also Temu and Shein have been hammered. Temu faced almost identical reasons. Because Temu failed to filter out cosmetics and children's toys, a fine of 200 million euros, approximately 300 billion won, was levied this year. Shein is currently also under investigation for similar reasons. The problem is that this law carries very heavy fines. Fines can reach up to 6 percent of global revenue. Although the issues were identified in the European market, the fines are based on global revenue. Of course, they do not all hit the maximum ceiling. In Alibaba's case, if the full 6 percent fine had been applied, the penalty could have reached up to 12 trillion won. The reason such a massive fine close to 1 trillion won was possible is precisely due to that standard. Alibaba, Shein, and Temu were caught under this law, leaving one major e-commerce platform remaining: JD.com. In fact, JD has been rapidly expanding in the European market by aggressively acquiring other European online commerce companies. Europe took issue with JD's acquisition of a German company. Using a somewhat unfamiliar term called the Foreign Subsidies Regulation, or FSR, simply put, it means JD merged with a European company using subsidies from the Chinese government. This is the first time an issue has been raised and investigated under FSR regulations. In effect, Europe is currently investigating or has imposed massive fines on all major Chinese online commerce platforms.

3. No Exception for the U.S. Either... From Google, Apple to Meta

Let us talk here about the 'digital barrier' I mentioned as important earlier. While Europe puts forward ensuring fair trade order and consumer protection as justifications, it is practically beside itself trying to block foreign platform companies. Therefore, it has been busy blocking not only China but U.S. platform companies from early on. Back in 2018, it already imposed a massive fine of 7 trillion 670 billion won on Google for market dominance by its Android operating system. Eight years later, this week, it slapped Google with another fine of 1.5 trillion won. This is because Google used its platform to promote its own company's products. On top of that, Gemini is being investigated separately. Is Google the only one? Apple has already been hit with 800 billion won, Meta with 320 billion won, and X with 200 billion won in fines. And Amazon is currently under investigation. More fines will likely follow. Large U.S. platform companies have been hit to the extent that hardly any of them have escaped punishment in Europe. Ultimately, the reason is singular: U.S. and Chinese platform companies dominate the market, preventing, obstructing, and threatening the establishment of a fair competition market. This justification has some valid points. Without looking far, we can examine Coupang in our own country. Once a company endures massive deficits, invests huge sums of money over years to dominate the market, and becomes the number one platform, even when problems arise, the government cannot properly lay a hand on it. Coupang is doing just that right now. Europe is in a position where these companies have practically devoured the European market, but if they completely surrender them as they are, there seems to be no countermeasure. That is why they are struggling desperately to levy fines and impose regulations.

4. Europe's Version of 'Isolationist Policy'... Why There Is No YouTube

However, let us change the question a bit here. If there had been global platform companies within Europe, if there were companies like Europe's own Instagram, YouTube, or Amazon, would Europe have created such laws today? One wonders if those who sailed ships 160 years ago all the way to the waters off Ganghwa Island in Joseon and threatened them by firing cannons to open their ports would have permitted such a law to be enacted if they had prominent top-tier platform companies of their own. In fact, Europe failed to nurture its internal companies during the period when platform companies grew explosively through the COVID-19 pandemic. Amid the influx of U.S. and Chinese platform companies, they failed to scale up and defend themselves. In the meantime, the gap widened further, making it increasingly difficult to cultivate companies with the capability to fight back. Consequently, they ended up in a situation where they are busy closing doors and erecting barriers. It looks virtually no different from the isolationist policy pursued by Heungseon Daewongun in the late Joseon Dynasty. The greed of global platform companies is certainly a problem. They are targets that must be constantly kept in check. However, Europe's belated defense of its home turf—failing to build up its own capabilities despite having sufficient market and capital power—does not look very likely to succeed through fines and regulations alone.

(Reported by Kwon Yeongin, Produced by Kim Soo-hyung, Video Reporting by Kim Si-nae, Video Editing by Hong Jin-young, Design by Yook Do-hyun, Produced by SBS Digital News)

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