When it comes to online search engines, Korea is among just a few countries in the world that are not dominated by Google, the global search engine leader, and this "small miracle’’ has been made possible by the presence of Naver, the nation’s biggest homegrown portal site.
In this respect, Naver deserves credit for defending the local Internet market from Google’s indiscriminate invasion. But the reality is not so. On the contrary, NHN, the operating company of Naver, has been under intensive antitrust audits since Monday when officials from the Fair Trade Commission (FTC) raided the company’s headquarters in Bundang, south of Seoul. Naver is suspected of using its dominant status in the search engine market ― it has nearly a 75-percent market share in Korea ― to impose unfair business practices on small venture companies and content providers.
The FTC is reportedly seeking to designate NHN as a dominant player in its market in response to complaints from the small online businesses, alerted by the company’s sprawling expansion into diverse online businesses such as shopping, real estate, music, cartoon and so on. In fact, NHN, which has 27 affiliates under its wing, has been criticized for leaving the country’s online ecosystem devastated to promote its own services because large family-controlled conglomerates, known as chaebol, used their dominance to drive mom-and-pop stores out of our neighborhoods.
A case in point is the online real estate market that has been one of the biggest victims of Naver’s relentless forays. Online property information providers thrived until Naver began its own service in 2005. As the company dominated the relevant market, however, only a few of them were able to survive.
This is not the first time that the government’s fair trade unit has acted to tame NHN that posted an operating profit of 700 billion won and sales of 2.4 trillion won last year. In 2008, the FTC designated the company as a dominant market player facing tough regulations and slapped it with 227 million won in fines for supporting its affiliates unfairly. NHN avoided the fine after an appeals court ruled in favor of the company, citing the lack of evidence verifying its unfair acts. The case is pending at the Supreme Court now.
Ironically enough, the current situation is that the most successful venture company in Korea is nipping the bud of promising venture companies. These dismal conditions must be rectified quickly. Without the restoration of a healthy venture ecosystem, there wouldn’t be a future for President Park Geun-hye’s "creative economy.’’