Taking on Naver at lastThe Saenuri Party decided to reform the Internet portal market by revising the Fair Trade Act. It will turn in a draft to the National Assembly this September. The party thinks that the near monopoly by one Internet portal has gone too far. This revision is clearly aimed at Naver, which accounts for 75 percent of online searches in Korea. Even though Naver and its supporters are saying that the press is colluding with the powers to kill it, it is imperative to correct the confusing, unfair and opaque culture of Internet portals.
Naver has become to a star among IT start-ups thanks to the support of people who wanted it to successfully compete against foreign portals like Google and Yahoo. People expected Naver would play an important role in building a new ecosystem in which one start-up like itself nurtures other start-ups. But Naver betrayed those expectations and has concentrated on expanding and diversifying its own businesses recklessly. With superior capital and market dominance, Naver fearlessly copies other companies’ ideas - especially start-ups’ ideas - and squeezes them out of the market.
Nor can consumers enjoy transparency or impartial searches. They are exposed to advertisements without knowing whether they are the genuine result of searches. Restaurants and retailers pass on the cost of advertising on Naver to consumers. Naver runs ads for agencies that spy on people. A teenager opened his own site on Naver to offer pornography. Naver accepts obscene keywords as long as they generate revenue. It is not playing the role of a medium of information. It has shamelessly sold whatever it could as long as it makes money.
The Saenuri party’s attempt to rein in monopolistic portals is fairly belated in comparison to other countries. The Federal Trade Commission in the U.S. has required Internet portals to differentiate advertisements from research results since 2002. The EU investigated Google by applying antitrust laws.
We expect the newly-revised law to ban unfair activities that destroy the ecosystem of start-up companies and to include effective and substantial clauses to make Internet portals provide transparent information to consumers.