South Korea's "Artificial Intelligence Basic Act" Takes Effect: Ambitions and Concerns of the World's First Comprehensive Regulatory Framework
24/01/2026
January 22, 2026, Seoul. South Korean President Lee Jae-myung announced at the day's meeting: "The Basic Act on Artificial Intelligence" comes into full effect from today. This statement marks the birth of a global milestone. According to the announcement from South Korea's Ministry of Science and ICT (MSIT), the full name of this law is "The Basic Act on Artificial Intelligence Development and Trustworthy Infrastructure Construction." It is widely referred to by officials and the media as the world's first comprehensive artificial intelligence law to take full effect, with its implementation speed even surpassing the European Union's "Artificial Intelligence Act," which was passed in June 2024 but will be implemented in phases until 2027.
South Korea, a nation that has nurtured storage chip giants like Samsung and SK Hynix, has publicly declared its goal to rank among the world's top three artificial intelligence powers, standing shoulder to shoulder with the United States and China. The enactment of this law is a crucial step in its grand strategy to build an institutional foundation. However, the law's implementation is not the end of the story, but rather the beginning of a new experiment involving innovation, regulation, security, and global competition. In startup incubators in Seoul's Gangnam District, founders of emerging companies are scrutinizing this new law with concern, asking straightforward and pointed questions: Why must we be the first?
The Birth of a Law: Framework, Core, and the Definition of "High Risk"
The legislative process of South Korea's "Artificial Intelligence Basic Act" is compact and efficient. The bill was passed by the National Assembly in December 2024 and officially came into effect just over a month later. Its core legislative purpose, as stated by the Ministry of Science and ICT, is to establish a cornerstone for AI innovation based on safety and trust. This positioning reveals the South Korean government's attempt to walk a tightrope between encouraging technological innovation and preventing social risks.
The core regulatory mechanism of the law revolves around two key concepts: transparency obligations and **high-risk AI classification regulation**.
Transparency obligations are the most intuitive requirement of the law. It mandates that any company using generative artificial intelligence to provide products or services must inform users in advance. More importantly, for AI-generated content that is difficult to distinguish from real content, especially synthetic media such as deepfakes, clear labeling is required. The specific form of labeling is defined as digital watermarking. According to the legal text, for content easily recognizable as artificially produced (such as animations, webcomics), invisible digital watermarks detectable only by software are permitted; however, for deepfake content that is realistic enough to be mistaken for genuine, the watermark must be perceptible to users. Officials from South Korea's Ministry of Science and ICT describe this measure as a minimum safety guarantee to prevent the side effects of AI technology misuse (such as deepfake content) and emphasize that this is already a global trend adopted by major international companies.
More far-reaching is the definition and regulation of high-risk artificial intelligence by the law. The bill explicitly lists ten sensitive areas, including nuclear safety, criminal investigations, loan assessments, education, healthcare, drinking water production, transportation, and more. AI systems applied in these fields are classified as high-risk or high-impact AI. The law imposes stringent requirements on these systems that go far beyond transparency obligations: they must ensure human oversight, conduct risk assessments, develop management plans, and implement continuous monitoring. This means that if an AI system is used to evaluate loan applications or provide medical advice, its developers and operators will bear heavier legal responsibilities.
The law also includes explicit long-arm jurisdiction provisions. Any global company providing AI services in South Korea, as long as it meets any of the following conditions: global annual revenue exceeding 1 trillion KRW (approximately 681 million USD), sales in Korea exceeding 10 billion KRW, or daily average users in Korea exceeding 1 million, must appoint a local representative. Currently, giants such as OpenAI and Google have already fallen under this regulatory scope. For violations, the law sets a maximum administrative fine of 30 million KRW (approximately 20,400 USD). However, the government plans to implement a one-year grace period during which no penalties will be imposed, to help the private sector adapt to the new regulations.
The "First" Title in the Global Regulatory Race: Diverging Paths of South Korea and the European Union
South Korea's claim of being the world's first is not without controversy. The European Union insists that its "Artificial Intelligence Act," passed in June 2024, is the world's first set of artificial intelligence rules. Behind this dispute over nomenclature lies a clear contrast between two different regulatory philosophies and approaches.
The EU's approach is gradual and risk-tiered. Although the legislation has been passed, it includes a comprehensive applicability buffer period lasting several years, extending until 2027. However, over the past year, EU regulatory authorities have been empowered under this legislation to ban AI systems deemed to pose unacceptable risks to society, such as real-time facial recognition using cameras in public spaces or assessing criminal risk solely based on biometric data. The EU's penalty framework is also more stringent, with fines reaching up to 7% of global turnover. This represents a regulatory model based on the precautionary principle, emphasizing rigid constraints and severe penalties.
South Korea's approach leans more towards agile and development-oriented. Its law comes into full effect at once, but initially provides space for industry adjustment through grace periods, support platforms, and relatively low penalty amounts. The statement by Lim Mun-yeong, Vice Chairman of the South Korean President's National AI Strategy Committee, is quite representative: skeptics worry about the regulatory consequences brought by the enactment of the law. However, our country's transition to artificial intelligence is still in its early stages, with insufficient infrastructure and systems. He added that there is a need to accelerate AI innovation to explore an unknown era. He even stated that if necessary, the government will suspend regulations accordingly, monitor the situation, and respond appropriately. This statement clearly indicates that South Korea's regulatory framework has built-in flexibility, with the ultimate goal of serving the national strategic objective of becoming a top AI power, rather than regulating for the sake of regulation.
Meanwhile, other major economies are also taking action. At the federal level in the United States, there is a tendency toward light-touch regulation, but states have begun to make breakthroughs. For example, California signed a landmark artificial intelligence chatbot regulation law in October 2025, requiring operators to implement key safeguards. China has already introduced some rules and proposed establishing an agency to coordinate global regulation. The global AI governance landscape shows clear fragmentation and path competition. South Korea has chosen to take the lead in launching a comprehensive framework, aiming to seize discourse power in rule-making and shape a favorable international normative environment for its technology companies going global.
Cheers and Groans of the Industry: Adaptation of Large Enterprises and Anxiety of Startups
The enactment of any regulatory law will create ripples within the industrial ecosystem, and the size of these ripples varies depending on the scale of the enterprise. For South Korean tech giants such as Samsung, SK Hynix, Naver, and Kakao, the "Artificial Intelligence Basic Act" brings clearer rules of the game rather than a survival crisis. These companies possess substantial financial resources, mature legal teams, and strong government lobbying capabilities, enabling them to meet compliance requirements with relative ease. To some extent, the provisions targeting overseas giants in the law even establish certain market barriers for these domestic leaders.
Genuine anxiety pervades South Korea's startup community. Lim Jung-wook, co-head of the Startup Alliance, candidly expressed this sentiment. According to a survey by the alliance, only 2% of AI startups believe they have established formal compliance plans, while approximately half admit they do not fully understand the new law. Lim Jung-wook pointed out that founders are concerned about the ambiguity of legal language, which may force them to adopt overly conservative development strategies to avoid regulatory risks, thereby stifling innovation. Why must we be the first? Behind this question lies startups' deep-seated worries about compliance costs, uncertainty, and the potential loss of market opportunities.
This concern is not unfounded. Although the law sets a grace period and a maximum fine of 30 million KRW (indeed mild compared to the EU), for startups with tight cash flow, any additional compliance burden and potential fine risk could be heavy. They worry that to meet the human oversight and risk management requirements for high-risk AI fields, they will have to invest scarce resources originally intended for R&D. A more fundamental worry is that vague regulatory boundaries may lead to a chilling effect, causing developers to proactively avoid application areas that could be classified as high-risk but have great innovative potential.
The South Korean government has clearly taken note of this feedback. On the day the bill took effect, President Lee Jae-myung urged policymakers to listen to industry concerns and ensure that venture capital firms and startups receive sufficient support. The Ministry of Science and ICT also quickly launched an AI Act support platform, pledging to provide advisory services to businesses during the grace period and stating that it will continue to review measures to minimize the burden on the industry, even considering extending the grace period based on domestic and international industry conditions. These actions reflect the government's delicate balancing act between advancing regulation and nurturing the seeds of innovation.
Watermarks, Deepfakes, and Implementation Dilemmas: Practical Challenges in the Enforcement of Laws
The grand blueprint of the "Basic Law of Artificial Intelligence" immediately reveals numerous urgent implementation challenges when it touches upon technological realities. At the forefront is the reliability issue of its core tool—digital watermarking.
Legal requirements mandate the imposition of user-perceptible watermarks on AI-generated content that is difficult to distinguish. However, the current technological reality is that many online tools can easily remove or forge digital watermarks. If watermarks can be erased with just a few clicks, the practical effectiveness of this regulation in preventing the misuse of deepfake content will be significantly diminished. This is not merely a technological battle between offense and defense; it raises a fundamental question: in the context of rapid technological iteration, how can the vitality and effectiveness of legal provisions centered on specific technological solutions (such as watermarks) be ensured?
The second challenge is the classic dilemma of jurisdiction and cross-border enforcement. The law requires overseas companies meeting certain thresholds to appoint local representatives, but this cannot cover all overseas AI tools and platforms serving Korean users. A large number of generative AI applications spread across borders via the internet, with their servers and operating entities potentially located entirely outside South Korea. How can Korean regulators effectively monitor, identify, and restrict non-compliant content generated overseas but potentially disseminated domestically? This is a common challenge in global digital regulation for which a perfect solution has yet to be found.
The third challenge concerns the complexity of dynamically delineating high-risk boundaries. The law enumerates ten sensitive areas, but the application scenarios of artificial intelligence are constantly evolving. Could a recommendation algorithm that seems ordinary today be reclassified tomorrow due to its profound impact on public opinion? Regulatory agencies must possess a high degree of expertise and agility to keep pace with technological advancements, thereby avoiding regulations that are either outdated or overreaching.
These challenges are not unique to South Korea, but as the first to venture into uncharted territory, South Korea's exploration, trial and error, and adjustments in practice will provide invaluable experience for those who follow. The built-in grace periods, support platforms, and flexible review mechanisms in its laws are precisely the spaces reserved to address these unknown challenges.
The enactment of South Korea's "Artificial Intelligence Basic Act" is far more than a national legislative event. It serves as a landmark signal indicating that global AI governance has entered deep waters. South Korea has chosen a unique path: between the European Union's rigorous incremental approach and the United States' industry self-regulation, it seeks to carve out a third regulatory path that is development-oriented while balancing safety and innovation.
The success of this law will depend on the interplay of multiple factors: the wisdom and flexibility of regulatory agencies in enforcement, the adaptability and innovation capabilities of the industry, especially the startup ecosystem, and the new challenges brought by the evolution of technology itself. Whether the South Korean government can, as it claims, suspend regulations when necessary and truly achieve a delicate balance between promoting innovation and managing risks will be a key window to observe whether its AI ambitions can be realized.
For the rest of the world, South Korea serves as both a testing ground and a reference point. Its experiences and lessons, whether regarding the practical effectiveness of watermarking technology, the real impact on startups, or the feasibility of cross-border regulation, will provide crucial empirical evidence for countries currently formulating their own AI rules. On the journey to explore the uncharted era of artificial intelligence, South Korea has already cast the first dice, with the nation's technological future at stake. The outcome of this regulatory experiment will soon no longer be merely a domestic affair for South Korea, but an indispensable chapter in the global narrative of AI governance.
Reference materials
https://www.ndtv.com/world-news/south-korean-law-to-regulate-ai-takes-effect-10840732
https://www.channelnewsasia.com/east-asia/south-korea-law-regulate-ai-takes-effect-deepfake-5876151
https://www.thestar.com.my/tech/tech-news/2026/01/23/south-korean-law-to-regulate-ai-takes-effect