Moves to rein in online portals for perpetrating unfair business practices are gaining momentum in Korea

2013-07-24 17:06

Reining in portals

Moves to rein in online portals for perpetrating unfair business practices are gaining momentum. On Tuesday, the ruling Saenuri Party organized a meeting to listen to small venture companies that complained about damage from Naver’s dominance in the Internet search engine market. The governing party is introducing a bill to tackle antitrust issues raised by the nation’s largest portal which has a 75 percent share of the local online market.The Fair Trade Commission has also been investigating the Internet giant since May in response to complaints about its unfair business practices. To confirm Naver’s unlawfulness, the antitrust agency must prove that the search company is a dominant player in its market and that it abused its power to set prices unfairly in trade with small companies.
But it’s questionable if these regulatory moves will settle the alleged antitrust problems down the road.
No wonder that small venture companies have spoken up against NHN, the operator of Naver, which has built up an online business empire since its inception in 1999 through its headlong expansion into online information services markets such as shopping, real estate and cartoons. During Tuesday’s meeting, an online real estate company complained that its sales dipped by as much as 36 percent after Naver made a foray into the relevant industry.
Armed with rich capital and market dominance in Internet search, Naver has served as an online predator by copying the ideas of startups and driving them out later. The online giant has also been under fire for highlighting its own services on its influential results page while burying links to competing sites.
In recent months, the country’s major newspaper companies launched indiscriminate attacks on Naver, illustrating  these and other alleged unfair practices perpetrated by Naver, which posted an operating profit of 700 billion won on sales of 2.4 trillion won last year. Jealousy seems to be behind the media outlets’ tough assault on Naver, but it is also an undeniable fact that the homegrown portal has nipped promising venture companies in the bud and left our online ecosystem desolate.
Given this, there needs to be measures that will tame Naver in one form or other, but introducing regulations simply won’t help solve the entrenched problems. Rather, this will only result in benefitting Google and other foreign Internet giants. Imposing restrictions on Internet companies is barely seen globally, either.
It’s for this reason that the government and politicians should be careful in creating new red tape in our cyberspace. Naver, for its part, needs to drop minor businesses and take the lead in reinvigorating our venture industry.