This file photo taken Oct. 6, 2020, shows Naver Corp.’s headquarters in Seongnam, south of Seoul. (Yonhap)
SEOUL, Dec. 16 (Korea Bizwire) — South Korean internet portal giant Naver Corp. has been defeated in an appeal suit against the antitrust regulator that had fined the portal for manipulating search results and abusing its market dominance to the detriment of its competitors.
In 2020, the Fair Trade Commission (FTC) accused Naver of manipulating search algorithms in favor of the company’s online shopping site and imposed a 26.7 billion-won (US$22.9 million) fine.
The tech giant said it would dispute FTC’s decision in court, arguing the algorithmic changes were unrelated to excluding competitors.
However, the Seoul High Court recently ruled against Naver in a lawsuit filed against the FTC for the cancellation of the correction order and fines.
The court judged that Naver’s practices could suppress competition in the open market and, thus, can be interpreted as abusing its market dominance.
It added, “The emails and meeting data shared by Naver employees indicate that Naver adjusted search algorithms to analyze their impact on the frequency of exposure for Smart Store products and established follow-up plans based on the results of the analysis.”
The court stressed that unlike expectations that Naver Shopping would provide search results best-optimized to meet consumer demand, it placed Smart Store products on the top of search results, a clear violation of government regulations protecting consumers from unfair business practices.
According to FTC, Naver made algorithmic changes in favor of the company at least six times between 2012 and 2015.
In February 2012, or two months before Naver began its own online shopping service, Naver manipulated search algorithms that lowered the rankings of goods sold by competitors, such as Gmarket and Interpark.
Naver also tweaked its algorithms to show more search results for goods and services when they are linked to the company’s payment service, Naver Pay.
As a result, the market penetration rate of Naver’s shopping platform jumped to 21.08 percent in 2018 from 4.97 percent in 2015, FTC said.
Naver accounted for about 70 percent of the search market in online shopping.
Kevin Lee (kevinlee@koreabizwire.com)
