By Lee Kyung-min
Naver is accused of stealing the business models of startups and bullying them if they protest.
According to industry watchers, Korea’s biggest portal also favors its affiliated products and services in search results, compromising the objectivity expected of such a service.
Menupan.com is one company that is alleged to be a victim of Naver bullying.
The site’s CEO, Lee Won-woo, spent 13 years collecting the location of 70,000 famous restaurants and their menu prices nationwide.
In 2003, his efforts paid off, when the site had some 120,000 members who were willing to pay for the information held on Menupan.com.
Then in 2010, Naver launched the Wingspoon app in response to Menupan.com. The same year, Menupan’s sales nosedived to 3 billion won from 6 billion won in the previous year. Sources say the site is not making a profit now.
A spokeswoman said that they were disheartened about Naver launching a similar app.
When asked how Naver damaged their business, she said, "I can't make any official comment for the company." Pressed further, she said "I'd rather not comment on that."
Prof. Kim In-sung of Hanyang University said the small companies' reluctance to speak out has much to do with Naver's dominant status.
"They can't officially blame Naver,” Kim said. “They are afraid that Naver will kick them out for good. Naver can do that."
StyleShare is a fashion mobile app launched in September 2011. It has some 350,000 followers and 1.2 million monthly visitors. In April, Naver launched a similar app, “Wannabe.”
Likewise, Naver released the mobile game Line Pop in response to national sensation Anipang developed by SundayToz.
As of June 21, Line Pop outnumbers Anipang in terms of downloads: Line Pop has 30 million, while Anipang has 26 million.
Now, Naver faces questions about the objectivity of its search results.
“Search portals should be objective when presenting information. This is far from what Naver is doing,” Kim said. His assessment is attested by Naver's current search presentation.
Naver-related products and services are the first to appear in search results. This is another way of Naver managing its search engine capabilities.
For example, when a user searches the word “game,” Naver-developed content appears first. Specifically, “Naver Online Game” is the first result on the page along with detailed images and information.
And it takes one more click to see the results of "popular games searched" page. Games such as Maple Story and FIFA Online, both by game developer Nexon, and League of Legends by another game developer Riot Games, are not the first results shown.
The same situation applies when users search for maps, messenger services, and song titles.
When one enters the word "messenger" or "map," Naver’s map service and Naver-developed SimSimi app appear first.
Similarly, when a user searches for a song title, Naver’s music service is top of the result list, not other companies such as MelOn or Bugs.
Experts say these practices by Naver should be scrutinized.
"There needs to be regulation to rein in Naver from prioritizing the information as they see fit," said Seoul National University professor of economics Lee Sang-seung in a phone interview with The Korea Times.
Naver uses its search engine as the ultimate source of income power. By showing ads first.
"When a user enters a word on the search field, Naver shows the results according to the per-click price the advertisers paid — the greater the amount the advertisers paid, the higher up in the search results their companies’ names appear," said a Naver Customer Service Center worker over the phone.
"For example, per-click advertising for the word 'mortgage loans' costs 63,990 won for a first-place result. Second-place result costs 18,900 won," she added.
This is one of Naver’s practices arranging algorithm for search results.