[Gwanghwamun] The Tada incident is still ongoing

"I will ensure that nothing like 'Tada' ever happens again in the Republic of Korea."

This was the message Lee So-young, a Democratic Party of Korea lawmaker nominated as the nominee for Minister of SMEs and Startups, recently voiced on her way to work. She emphasized her determination to become a 'regulatory Je Gae-hyeok-bu (Minister)' and tear down the dense walls of regulation. Reactions from the venture and startup sectors to this bold pledge by a past Choi Yeon-so (Minister) nominee are mixed. While there are voices expressing hope for young leadership, there is also self-mocking cynicism saying, "Is it starting all over again?" This is because, even as the government and political sphere chant slogans like "We will prevent a second Tada incident," similar cases that stifle innovation continue to repeat on the ground.

A prime example is the recently passed revision of the Pharmacy Act in the National Assembly, commonly known as the 'Doctor Now Prevention Law.' This bill restricts wholesale drug distribution by telemedicine platforms. Doctor Now, which entered the wholesale drug business to solve the problem of patients running back and forth between pharmacies with prescriptions—the so-called "pharmacy shuttle"—was forced to abandon its operations. Private efforts to improve services and reduce public inconvenience once again knelt before the backlash from vested interests and political favoritism.

This is not unique to Doctor Now. Even in areas where the government encouraged market expansion by granting special exemptions under the 'regulatory sandbox,' absurd situations have arisen where businesses must shut down. LucentBlock, which operates the real estate fractional investment platform 'Soyu,' was designated as a special exemption project since 2018, secured 500,000 users, and pioneered a new market in real estate fractional investment. However, it ultimately failed during the preliminary approval review by the Financial Services Commission for an over-the-counter exchange. After working tirelessly to grow the market within the regulatory exemption framework, LucentBlock was pushed out of the market at the formal licensing stage, ceding its place to a consortium centered on traditional financial institutions.

The core of the controversy is not the business models of individual companies like Doctor Now or LucentBlock. The bigger issue lies in how our society accepts innovation. When new technologies and services emerge, the government encourages entrepreneurship, creates regulatory sandboxes to provide opportunities for demonstration, supports investment, and champions 'innovation-led growth' and 'regulatory reform.' However, once innovative companies enter the market and begin to disrupt the order of existing industries, the narrative changes. The moment conflicts arise between established businesses and stakeholders, leading to increased backlash, new regulations are created to preserve the old order. Thus, second and third Tada incidents repeat themselves.

Of course, each regulation has its rationale. Preventing conflicts of interest in pharmaceutical distribution is essential, and ensuring the soundness of financial institutions and protecting consumers are also critical. However, we must ask ourselves once again: Is it truly in the interest of consumers, and ultimately national competitiveness, to block market entry by innovators simply because they clash with vested interests in existing industries? We are not calling for special privileges for innovative companies. We are asking for rules that allow them to compete on equal footing with established businesses. While regulations are necessary to protect consumers and ensure safety, they must be distinguished from those designed solely to protect vested interests.

Venture investment has begun to recover slightly this year, and a wave of entrepreneurship is sweeping the country again. The government has also made 'becoming an entrepreneurial nation' a national task, sparing no policy funding support. However, what entrepreneurs truly need is not just subsidies or slogans. What they need is the 'belief' that when they create new markets and achieve success, that success will not become a reason for imposing regulations.

For the promise "We will not create a second Tada" to stop being mere political rhetoric, the system must be changed. Companies that pioneer new markets through regulatory sandboxes must be guaranteed clear legal and institutional stability. When conflicts arise between old and new industries, the National Assembly and the government must prioritize 'consumer convenience' and 'national competitiveness' as their top criteria. It is time to go beyond merely speaking of innovation; we must open the path for innovation to transform the existing order.

[MoneyToday startup media platform Unicorn Factory]