November 28, 2024

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South Korea‘s antitrust regulator on Oct. 6 imposed a 26.7 billion won ($22.9 million) fine on Naver, accusing the company of manipulating search algorithms to favor its own online shopping business.

Naver, in response, said the company will appeal the accusation and the fine, a record-high amount imposed on a platform operator in South Korea. 

According to the Fair Trade Commission‘s announcement, Naver made changes in search algorithms to have products or services sold by those that are linked to its payment service Naver Pay have better exposure on the company’s online shopping platform. It made products sold by other online shopping competitors, such as Interpark and Gmarket, rank lower on search results, according to the FTC.

Naver`s headquarters in Seongnam, Gyeonggi Province (Yonhap)

Naver made changes to the algorithms at least six times between 2012 and 2015 to favor its own online shopping business, the FTC said in its ruling.

South Korea‘s antitrust watchdog accused Naver of using the changes in its search algorithm to increase its market share. Naver‘s share in the open market sector surged to 21.08 percent in 2018 from 4.97 percent in 2015, while the shares of its competitors went down.

Naver, however, argued that the antitrust watchdog is using a select few algorithmic changes to make the accusation. Naver said the company has made changes in the search algorithms around 50 times from 2010 to 2017, to improve search quality of the goods and services provided on its platform.

Naver also dismissed the charges that the company have made algorithmic changes to show more search results for products provided on its platform, as well as those linked to its payment service.

Meanwhile, the FTC also said it has found that Naver changed its algorithm in favor of videos linked to its video sharing platform Naver TV.



By Shim Woo-hyun (ws@heraldcorp.com)