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Local representatives of overseas online platforms such as Google and Facebook faced scathing rebukes from South Korean National Assembly members during a parliamentary audit. The criticisms covered a diverse range of topics including taxes, communications network usage fees, and fake news response measures. The South Korean government announced plans to have the relevant ministries jointly investigate taxation issues involving overseas providers.

Appearing as a witness on the afternoon of Oct. 10 in a parliamentary audit of the Ministry of Science and ICT by the national Assembly Science, ICT, Broadcasting and Communications Committee, Google Korea CEO John Lee received a blistering rebuke from members when he balked at their request to disclose the company’s South Korea sales and net profits to tax authorities, claiming he could not respond because the details were a business secret.

Responding to questions from Democracy and Peace lawmaker Kim Kyung-jin and others, Lee said, “I cannot disclose sales for individual countries, and we abide by tax law and international tax treaties in South Korea.”

Google is known to have sales in the billions of US dollars in South Korea through advertising and Google Play, but no specific details have ever been disclosed. The massive domestic earnings are also not fully taxed because the sales are listed as taking place overseas.

Shortly after Lee’s reply, committee chairperson Noh Woong-rae said, “There are some problems with the tenor of the remarks. This is not the attitude of a global company, and it is far from ethical.”

Facing similar questions, Facebook Korea CEO Damian Yeo Guan Yao said he could “not reveal specific tax numbers because they constitute business secrets.”

At the same time, he did announced plans to calculate advertising sales in South Korea in a separate account as of 2019.

“We believe there will be detailed numbers as of next year,” he said.

The issue of overseas businesses not paying network usage fees was also raised. Domestic businesses such as Naver and Kakao that generate large amounts of traffic pay millions of dollars per year in network usage fees to telecoms. In contrast, Google – operator of YouTube, the top-ranked video site by market share – not only does not pay the fees as an overseas business, but has cache servers set up in telecom data centers. When asked how many cache servers were present in South Korea, John Lee said he could “not disclose” the details.

Kakao chairman Kim Beom-su said, “The network usage fee issue is not simply a matter of cost-cutting. There are things you can and can’t do based on network usage fees.”

“I’d like to see the National Assembly taking an interest in the fact that we are unable to provide high-resolution services [while YouTube can],” he added.

Democratic Party lawmaker Park Kwang-on claimed that YouTube is serving as a pathway for propagating fake news. Noting examples of the site shutting down channels for US users sharing false information and blocking 60,000 videos in Germany containing hate speech and other similar content, Park asked how many examples had been blocked in South Korea.

“I don’t know,” Lee replied, adding that Google “takes false information very seriously and is doing its best technologically and at a human level to prevent this.”

Meanwhile, Minister of Science and ICT Yu Yeong-min announced plans for a joint government investigation into taxation issues involving overseas businesses. Following numerous comments about tax issues during the parliamentary audit that morning, Yu said his ministry was “cooperating with the Ministry of Economy and Finance, the Financial Services Commission, the Fair Trade Commission, and the Korea Communications Commission to discuss the foreign company taxation issue.”

“We also plan to discuss a joint investigation [to determine the amount of sales],” he added.

By Paek Tae-woo, staff reporter

Please direct comments or questions to [english@hani.co.kr]