March 18, 2025
SEOUL – Let’s look at the Earth from afar. As of now, the global community consists of 197 sovereign states. They cooperate. They trade. Sometimes they fight.
These 197 states exercise their sovereign authority within their respective territories — called the “territoriality” principle in legal jargon. And there are two ways this principle manifests itself.
The first is an easy one: someone or something is within the territory of a country and the country can exercise its sovereign jurisdiction over the person or over the thing. The other is a curveball: Someone or something is located outside the territory, and yet its effect is being felt within the territory of a country. Here, the “effect” exists within the territory, so the country being affected can invoke “territoriality,” so goes the rationale.
You are right. Under this scheme, two countries (and sometimes many more countries) may vie for sovereign power over the same person or event. Consider a country where an event happened and another country where the effect of the event is being exerted. Should the effect be multinational, many countries will step forward. And all of them cite the same principle — territoriality.
Not surprisingly, the dual (or triple or more) territoriality contest led to disputes and sometimes legal proceedings. But the problem was not that acute because the phenomenon was largely confined to certain sectors such as price fixing, bribery and corporate crimes. In many other areas, the effect coming from overseas was a rare incident. Even if so, the extent of the effect was either minimal or negligible. So, the sovereignty contest based on territoriality did not have to come front and center.
The whole thing is now changing and changing fast. Digital technology is the reason. The world is all wired and connected by digital networks of numerous kinds, so an event in one place can easily cause an effect in another country and in fact in many other countries. Ubiquity and simultaneousness define cyberspace and cyber activity. As they say and as used in a movie title: everything everywhere all at once.
Just look around us. We work, study and play with a flotilla of global IT giants — Apple, Google, Amazon, Meta, YouTube, Netflix and the like. They do business on a global scale. They provide services and make profits without physically entering another country or establishing facilities in another country. And yet, their business arguably exerts considerable effect in other countries.
In a world where everything is connected, everything affects each other, which in turn means that, under conventional norms, sovereignty over the same matter can be exercised by as many states. So, here, we have the companies’ national states, on the one hand, and many other countries on the other engaged in the territoriality contest. No wonder this issue has become a global flash point recently.
Of course, artificial intelligence has added fuel to this process. The intensity of connection is unprecedented, and the gauge of “effect” is reaching a new level in the global dashboard.
Now let’s see how this contest actually plays out. Those countries at the receiving end of digital services begin to adopt legislation to regulate overseas IT companies. They invoke legitimate regulatory objectives — orderly domestic market, consumer protection, personal information or national security. A key rationale here again is that the activities of the target foreign companies, although carried out outside national borders, are still exerting effect in their respective territories.
South Korea, itself a major digital product market for global IT giants, joins this global trend too. Many pieces of recent South Korean legislation pronounce this effect rule. Just to mention some handy examples: Telecommunications Business Act, Information and Communications Network Utilization Promotion Act, and AI Basic Act.
The problem is, those countries on the providing end of the services have a different view. In their mind, IT companies are their national companies operating within their territories, so long story short is that they have authority over the companies. To them, other countries’ long-arm jurisdiction over these companies runs afoul of the conventional rule (because those companies physically exist in their home countries and any effect on foreign soil is not big enough), almost bordering on protectionism to harass foreign business entities and favor domestic competitors.
As both sides cling to the same principle — two sides of the same territoriality coin — their claims run parallel to each other. The truth of the matter is, the conventional legal norms are just outdated here; this is another case of digital society struggling in the straitjacket of an analog system. New rules should emerge to regulate digital activities. They eventually will. Until then, domestic digital regulatory schemes of many countries will remain a pain point in international relations.
South Korea and the United States have held different views on this issue. At his Senate confirmation hearing in early February, US Trade Rep. Jamieson Greer made a critical remark about South Korea’s recent digital regulation, most notably the long-proposed Online Platform Fairness Act which he described in his earlier media commentary as a potential source “to cause another flare-up in trade tensions.”
Obviously, his remarks came at a particularly fraught time. The Trump administration is now mentioning non-tariff barriers in the context of reciprocal tariffs to be imposed on April 2. I am afraid digital regulation is entangled and hauled in the dragnet of non-tariff barriers in the upcoming US tariff mix. I hope not. Digital regulation is not about trade deficit or non-tariff barriers. It stems from a structural limitation (analog-digital time lag) where a viable solution, for now, may only be found in the two countries’ cooperation for a win-win solution. For instance, more clarity on the provisions of domestic legislation, non-discriminatory application and reasonable allocation of sovereign authority over digital companies are within reach if the two sides sit together for good faith discussion.
Once the tariff storm is over, South Korea and the United States should explore possible joint projects. Digital rule-setting is always a strong candidate in the list. A bilateral package here can set the tone for a new rule for the global community of 197 states.
Lee Jae-min is a professor of law at Seoul National University. The views expressed here are the writer’s own. — Ed.