South Korea's heavily regulated Internet gives Google conniptions

While South Korea has an incredibly advanced broadband infrastructure and a thriving startup ecosystem, regulatory issues make it difficult for some Internet companies to work there.

Take, for instance, Google, which is used to easily dominating every market it enters. In Korea, it’s not so easy.

I learned about one of those issues last week, when I moderated a panel discussion at a “Global Startup Showdown” for Korean and Korean-American companies in Silicon Valley, which was sponsored in part by the Korean government. In South Korea, liability for corporate officers is much less limited than it is in the United States. Here, a company goes out of business and the chief executive can jump right into his next startup, even if he’s left a giant, smoking hole of debt behind him. In Korea, the CEO is personally responsible for the company’s finances, Tae Hea Nahm, a partner at Storm Ventures, explained to me. If the company goes out of business, the CEO is left holding the bag.

That puts a lot of pressure on Korean entrepreneurs to make sure their company succeeds, to be sure. But it may also give entrepreneurs pause before starting a company in that country: Are you really ready to put yourself on the line?

Yesterday, the New York Times reported on some other differences between South Korea and the rest of the world: The Internet is far more regulated. For example:

• Schoolchildren can’t play online games in the evening.
• Adults who want to play online games at night need to provide their resident registration numbers.
• Until last year, commenters were required to use their legal names when posting comments.
• Many sites ban search engines from indexing their websites. (This is easy to do anywhere in the world with a robots.txt file, but most people in other parts of the world want search engines to index their sites.)
• Google Maps can only provide directions via public transit, not by car, bike, or on foot.
• Maps and other navigation data cannot be exported outside the country.
• A government ministry, the Korean Communications Standards Commission, blocks “objectionable” content, including porn.

For foreign companies trying to do business in South Korea, these regulations are maddening. Google, for instance, finds it hard to offer competitive mapping services because of the maps data export restriction. Google’s servers are located outside Korea, so putting the maps data on their servers would constitute an “export” of that data.

As a result, South Korea is one of the few places where Google is not number one. Naver, a Korean-language search engine that’s based in Seoul, is the top search site in the country, the Times writes.

The Korean government is starting to ease some of these regulations, but the changes are not coming soon enough for the likes of Google. For instance, the country is making a special set of map data available for foreign Internet companies to use. Unfortunately, the official map data is not detailed enough to provide the resolution Google needs to be competitive.

Tough luck, Naver said, in a statement to the Times. “We just think any services should be carried out within the framework of the law. … The same laws should apply to all providers of Web map services, domestic or foreign.”

In other words: Suck it, Google!

Of course, if Korea’s regulations do eventually change enough to allow Google to compete the way it is accustomed to, let’s just hope that Naver’s CEO is fully prepared to take responsibility for what happens to his company.