On the day the provider's, SK Broadband (SK), suit was first reported, Netflix shares fell slightly, while SK shares rose by more than 1%. "Squid Game" and "D.P." are two of the most popular Netflix productions driving South Korean viewers to the streaming service.
SK recently won a ruling in a South Korean court stating that Netflix is "obligated to provide something in return for the service" provided by the South Korean company. Netflix has since appealed the ruling.
"Google-YouTube and Netflix that account for the majority turning a blind eye to network usage fees," Ruling party lawmaker Kim Sang-hee said.
In a suit Netflix filed last year regarding its obligations to SK, the content provider argued that it doesn't owe internet companies anything except for access to its content. The internet providers claim that Netflix owes them maintenance costs, but the streaming service argued that network usage by internet content providers is "free of charge as a principle". Netflix pays for usage fees in many other countries, including the U.S.
As the country's second-largest traffic generator after Youtube, Netflix has been delivering more and more, increasingly data-heavy video content since it began using SK's dedicated line in 2018. Since the South Korean internet provider began handling Netflix's traffic, data processing has increased by 24 times. SK estimates that the streaming service owes the company 27.2 billion won ($22.9 million) for costs incurred in 2020 alone.
In defense of its right to use the South Korean networks for free, Netflix said in a statement that it had helped to create roughly 16,000 jobs in the country through 770 billion won worth of investments, along with an economic effect of around $5.6 trillion won.
"We will review the claim that SK Broadband has filed against us," Netflix wrote in a statement to CNBC reporters. "In the meantime, we continue to seek open dialogue and explore ways of working with SK Broadband in order to ensure a seamless streaming experience for our shared customers."