[Viewpoint] The decline of Korean Web portals

The champion of the Internet in Korea is the portal site. Visitors are attracted by the news content and search engine and the opportunities for shopping and advertising a portal site provides.

NHN, which operates Naver, has a total market capitalization of 10 trillion won. Daum’s market cap is over 1 trillion won.

Google dominates cyberspace all over the world, but it has struggled in Korea. Lately, once-formidable local portal sites seem to have lost direction in the age of mobile communications and are busy attacking one another.

NHN and Daum have reported Google to the Fair Trade Commission because of claims that the U.S. company prevented Korean search engines from being installed on smartphones by providing the Android operating system to the mobile phones.

Meanwhile, Daum and SK Communications, the second and third largest portals, have joined forces to compete with the leader, Naver.

As smartphones become more and more ubiquitous, the golden age of portal sites is waning. Dark clouds are gathering over the market. The portal sites are still the dominant leader in wired Internet services, but Google is aggressively rising in the mobile Internet realm.

The period of rapid growth for portal sites is obviously nearing its end. Last year, NHN had a single-digit growth rate in both sales and earnings.

Another problem is the lukewarm response of the domestic market to the controversy over Google, with Internet users not supporting the Korean portal sites in the fight. Feelings of patriotism are not playing a role. Rather, the portals sites are being given the cold shoulder for their arrogant attitude when they were dominating the Korean market.

Korean portal sites were once the pioneers in innovation. They created a sensation by providing new services such as Hanmail in 1997, Daum “cafe” forums in 1999, knowledge search engine Jisik iN in 2002 and the real-time listing of top search words in 2005.

However, all those glories have faded away. Since the early days, the portal sites provided free news content gathered from the media. They have ignored music and video copyrights. Abusing the sacrifices of content makers and providers, the portal sites monopolized Web traffic and focused on making money.

They aggressively acquired start-ups and venture companies with good services and products. And they shamelessly pursued a “me too” strategy and copied each other. Information technology expert Kim In-seong said that only when Google became the No. 1 search engine would the Korean Internet improve.

It is a question whether Korean portal sites are heading in the right direction. For Google, the goal is to minimize the time a user spends on its site. They focus on providing information as quickly as possible by providing a powerful search tool.

Google has won the hearts of users by offering remarkable speed and efficiency. Six years ago, Google saw into the future and secured the Android technology, the core operating system of smartphones. However, Korean portal sites went the opposite way. They are working to maximize the number of users and the time they spend on their Web site. The portals are hanging on to the simple premise that the more people visit the portal and the longer they stay, the more money they will make from advertising and online shopping.

The most ominous sign is the absence of a pioneering spirit and ambition. The wave of innovation has subsided since 2008, and talented workers began to leave the industry. One of the co-founders of NHN, Kim Beom-su, developed Kakao Talk, a popular mobile messenger for smartphones.

Former NHN developers created Cocone, a Japanese language educational application, and Sunday Toz, a popular social game. They agree that NHN has suddenly become boring. The venture spirit has disappeared. The once-defiant masterminds are continuing to pursue an already proven model of success rather than seeking new challenges.

The global Internet is driven by the three trends of openness, mutual benefit and sharing. Yet Korean portal sites depend on a closed environment and vested interests. They occasionally introduce a new product, but it is often a combination of existing services. They no longer display creativity, emotion and a pioneering spirit.

Korean users are leaving their computers and have begun to share more information and news through Twitter, Facebook and Kakao Talk. It is only a matter of time before social networks on the mobile Internet replace portal sites.

I am curious to know what the future will be for the Korean portals, which have been the dominant predators. Am I too pessimistic to spot a sign of decline when some hope for the birth of a Korean version of Google?

*The writer is an editorial writer of the JoongAng Ilbo.

By Lee Chul-ho