Naver+ membership launched despite claims of market power abuse

Naver+ membership ad. The country's leading portal launched its first subscription service, Monday. Courtesy of Naver

By Kim Hyun-bin

Naver, the country's leading internet portal, has launched its controversial Naver+ membership, Monday, a move aimed to attract more customers to its paid member sellers.

Naver+ member stores have an icon displaying “Naver+” on their product page, which indicates the stores will provide extra benefits to subscribers.

The move could be seen as creating an unfair advantage for sellers that have membership over those that don't. However, some say the initiative is to increase convenience for shoppers so it should not be viewed as an unfair trading practice.

Sellers make monthly payments for the Naver+ membership, which will make their products more prominent in search results and will allow customers to receive additional Naver Pay points for their purchases.

Naver's first subscription service for customers was launched for 4,900 won (about $4) a month, offering a 5 percent discount on transactions made via Naver Pay. Naver Pay also offers 1 percent cash back on all transactions in addition to the discount.

Subscribers can also choose additional offers such as viewing 10 webtoon series, listening to 300 songs from music streaming service Vibe, a 3,300 won cash credit for video streaming and 100 free megabytes on Naver's cloud storage service.

Naver's membership seems to offer better services than other competitors including Gmarket and WeMakePrice, which offer 3 percent and up to 4 percent rewards, respectively.

Industry watchers, however, said the increased benefits are intended to increase its subscription base to better penetrate the market as well as creating added value in the future.

The services will benefit Naver as it will increase subscribers to its payment system, leading to more store owners joining the membership program.

“Naver is using its market dominance to place preferential services compared to its competitors' services on its site,” a critic on the issue said. “Pretty much, it is indirectly telling sellers to use Naver Pay.”

Despite the controversy, Naver says its membership program uses the same method as other competitors and only added the + sign at the end of its original Naver Pay logo.

Last year, Naver reported online sales of 20.9 trillion won, exceeding one of the leading e-commerce platforms, Coupang, by more than 3 trillion won. Naver also dominated 73.3 percent of the domestic PC search engine market in March, making it difficult for individual online retailers to compete and putting them at a disadvantage compared to Naver + member stores.

The Fair Trade Commission (FTC) said Naver using its market power to promote its own services over competitors was an unfair transactional practice. This is not the first time Naver has tried to slide in its company marketing promotions. In 2013, the FTC slapped a 100 billion won fine on the firm for disguising ads as search query results, which deceived its portal users.

There has been an increase in calls for the government to strengthen restrictions and regulations to better prevent similar incidents, as the search engine industry faces unclear regulations in comparison to other areas.

The FTC has recently established a taskforce to tackle the issue including creating “fair competition standards” for online platform businesses.