'Naver should be designated monopolist'

By Baek Byung-yeul

Naver, Korea's largest portal, should be named and regulated as an entity that has a monopoly in the online search and news markets, a newspapers' association said Tuesday.

The Korean Association of Newspapers, representing 50 national newspapers and two news wire agencies, submitted a petition to the Korea Communications Commission (KCC), the nation's media regulator, July 30, calling for stricter regulations of Naver.

The association pointed out that the portal is not regulated as a monopolistic company even though it holds a 75.2 percent market share in online searches and 55.4 percent in online news.

“The association was required to submit a written opinion by the Internet Win-Win Cooperation Body, formed by the KCC, last February,” an association official said. “We delivered our opinion to the body that portal sites have wielded absolute power in the online news market.”

Under the current fair trade law, a company whose market share exceeds 50 percent is defined as a dominant company. The same definition also goes to the No. 1 company of a market where the top three players combine for more than a 75 percent share.

The association said Naver, Google and Kakao have a combined market share of 97.2 percent in the search market and Naver, Kakao and Nate have a combined share of 85.2 percent in the online news market.

The current law defines internet companies as value-added common carriers by borrowing telecommunication line facilities from common carriers but they are not subject to extra regulations.

The newspapers' association claimed Naver and other portal sites should be defined as monopolistic companies given that aggregate market value of Naver and Kakao, the country's two biggest portal operators is larger than the combined market value of the three mobile carriers SK Telecom, KT and LG Uplus.

“Naver's market value is 25.45 trillion won ($22.62 billion) as of July 23. It posted sales of 4.68 trillion won and 1.2 trillion won in operating profit last year. The combined market value of Naver and Kakao is 34.22 trillion won, which is larger than the 33.18 trillion won of SK Telecom, KT and LG Uplus,” the association said.

With its enormous dominance, Naver has been criticized for having too much editing power and has had a negative effect on the country's journalism, the association said. “Naver has dominated the online new market in which it has damaged the value of journalism and has threatened the news industry here.”

The antitrust agency chief previously said he acknowledged that Naver has had complaints made against it over its market dominance and he will consider probing the company if it violates regulations. “As the dominant player in the search business, Naver has been facing continued complaints from the industry over its market dominance,” he told a local news outlet in February.

Naver been embroiled in controversy over an online opinion public-rigging led by a blogger on news articles published on the portal. In response, Naver announced it would adopt an “outlink system” that leads newsreaders to the website of news producers. It also limited the number of comments a user can post on news articles.