The founder and largest individual shareholder of Korea’s dominant search engine Naver is under siege for being predatory, and has come under the spotlight as he appears to be following in Bill Gates’ footsteps

2013-10-08 19:18

Naver founder seeks Gates-style exit

By Choi Kyong-ae

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The founder and largest individual shareholder of Korea’s dominant search engine Naver is under siege for being predatory, and has come under the spotlight as he appears to be following in Bill Gates’ footsteps. Lee Hae-jin, 47, stepped down as CEO of NHN in 2004 and quit his position as chief strategy officer (CSO) of the venture giant in January 2011 to focus his energies on overseas operations, the Seoul-based company confirmed Tuesday. “Back then, he made the decision in a bid to seek a future growth engine overseas away from the already saturated domestic market,” an official from the company told The Korea Times by telephone.In August, NHN was split into two business entities — NHN Entertainment which operates Hangame.com, the leading online game portal in Korea, and Naver Corp. that counts Line Corp. in Japan among its core businesses. Line’s messaging app has grown rapidly to challenge U.S.-based social networking services such as Twitter and Facebook.
“We expect Line’s messaging app will easily draw 300 million users by the end of this year as the number of registered users already hit 200 million in July,” said the Naver official who asked not to be named.
Lee has served as chairman of the board of Naver, formerly known as NHN, since the company’s foundation in 1999 and as chairman of the Japan-based Line Corp. since January last year in a bid to expand the Line messaging services, similar to Kakao Talk in Korea, beyond Asian countries to global markets including the U.S. and Europe.
Lee was not available for comment.
His departure from these top positions have been compared to the step taken by Bill Gates, the co-founder of Microsoft, who resigned from the top managerial job in 2008 and has since kept his chairman post in the U.S. tech giant, while focusing on charitable activities through the foundation which bears his and his wife’s names.
Gates stepped down following a legal dispute with the government that began in 1998. The Department of Justice together with 20 states filed a landmark antitrust lawsuit against Microsoft. An initial ruling ordered the company to be broken up but the two parties reached a settlement in 2001.
Similarly, there is speculation that Lee’s withdrawal from the top positions was due to pressure from the country’s antitrust regulator over the company’s de facto monopoly in the country’s search-engine market.
As of the end of September, Naver accounted for 73 percent of the nation’s search-engine market in terms of personal computers, followed by Daum with 19.6 percent, Google with 4.4 percent and Nate with 1.3 percent.
The Fair Trade Commission reviewed the monopoly issue months earlier when Naver came under fire for its monopolistic control of the local market. But the regulator has yet to issue a ruling, the company said.
The monopolistic structure of the market only harms consumers.
Helped by robust demand for Line’s services, Naver posted sales of 1.09 trillion won ($1 billion) from its overall businesses in Korea and Japan in the January-June period, up from 862.9 billion won a year earlier.
The Line platform is not simply a messaging tool among users because the company sells virtual stickers and game items, and makes money through business partnerships with companies, another Naver official said.
Naver began its service in 1999 as one of several in-house ventures at Samsung SDS, four years after Daum.net launched its portal service in 1995. Multinational portals such as lycos.co.kr and yahoo.co.kr entered the Korean market in the 1990s but local portals later beat them with customer-friendly functions.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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