Debate sparks over platform firm's refusal to carry rivals' ads

Naver's headquarters in Seongnam, Gyeonggi Province / Yonhap

A backlash over Naver’s rejection of ads from an artificial intelligence (AI) startup has prompted the tech giant to overhaul its advertising policy, reigniting a dilemma over its standards for hosting ads from companies in the same industry.

Naver recently announced plans to revamp its advertising policy to allow ads from competing businesses and introduce a more transparent ad review system. The move comes in response to a controversy over its decision to block ads from AI website service platform operator WRTN Technologies.

Last week, Naver submitted its revised advertising criteria to Rep. Kim Jang-gyeom of the People Power Party (PPP), a member of the National Assembly's Science, ICT, Broadcasting, and Communications Committee.

The revised policy has changed a clause prohibiting ads from competitors in the same industry to permit contextual discretion. The modified clause states: “Certain ads may be restricted depending on the nature of the service or content of the individual platform where the ad is displayed.”

The policy also broadened the scope for ad execution by allowing ads from competing services. It further states that it will notify and consult advertisers in advance when restrictions are unavoidably necessary.

The company has also improved its review procedure for accepting ads. Previously, decisions regarding the ad restriction were made solely by related officials. But now, it will conduct a comprehensive review with several related teams, including advertising, legal and policy divisions, before high-level officials make the final decisions.

"Naver's advertising policies and processes, which had posed challenges to startups' growth, have been improved in about two months," Kim said. "I expect Naver to faithfully fulfill its social responsibility in building a competitive future AI ecosystem."

A cellphone is used to demonstrate WRTN's application. Courtesy of WRTN

This improvement comes as a follow-up measure to an incident in February, in which Naver notified WRTN that it could not run WRTN's performance-based display ads because it was deemed a "competing service."

WRTN had been using the advertising service since 2023. However, the tech giant suddenly refused to run two ads for WRTN’s new application. The startup asked Naver to reevaluate the ads for the app, which Naver again rejected, citing the same reason.

The issue surfaced when WRTN publicly appealed for a review of Naver’s decision, sparking controversy over whether Korea's biggest internet portal operator had unjustly prohibited the fast-rising AI startup’s ads.

Naver soon withdrew its rejection and approved the ads, describing the situation as a simple mishap that arose during the review process.

Naver CEO Choi Soo-yeon apologized last month, saying, "I assure you that such incidents will not happen again.”

However, questions were still raised over whether Naver intentionally excluded the AI startup's ads, suggesting that the dominant platform may be using its influence to hinder the growth of competitors.

Even with the modified clause in its ad policies, Naver would still be able to reject ads on the grounds of “competing services.”

“Naver explained that the clause (about rejecting ads) is intended to provide a ground for declining advertising requests from major platforms, such as Meta (including Facebook and Instagram) or Google,” a legislative aide to Rep. Kim told The Korea Times.

"After the policy adopted a negative regulatory framework, a startup, similar to WRTN, subsequently requested to run its ads and was approved without any issues.”

While Naver has the right to prevent its platform from being used as an advertising board for its competitors, its dominant position in the local market still raises concerns over fairness and gatekeeping within the tech ecosystem.

“We hope to see stronger partnership and cooperation between major tech firms and startups for mutual growth,” a WRTN official said.