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FTC accuses Naver of undermining market

Nov 20,2019
The Fair Trade Commission (FTC) has started proceedings to take action over Naver’s alleged abuse of its position in the search market by giving preferential treatment to its services over its competitors.

The antitrust body sent a report on the alleged abuses to the portal operator on Monday, outlining measures such as correction orders and a fine. The notification is similar to a prosecutor’s indictment.

“Naver has used its position in the portal market to dismantle the market’s competitive order,” said an FTC official.

Naver is accused of abusing its position in the search market by placing its services at the top of search results. The company provides a wide range of services including shopping, real estate and video content. For example, products that can be bought through Naver Pay or are registered in Naver’s Smart Store service are listed above other search results. The FTC also found similar results for property listing searches and video content as Naver TV results received preferential search results over rivals like YouTube or Afreeca TV.

A spokesperson for Naver said it is still reviewing the FTC report.

The FTC fined Naver on similar grounds in 2008. Back then, the company was accused of using its position to force video service company Pandora from inserting advertisements on its videos.

However, the Supreme Court ruled in 2014 that the search portal and video streaming markets are separate and that Naver could not have exerted absolute influence on the video streaming market.

The antitrust body is also expected to take a similar measure against Google Korea for abusing its position through its Android operating system that led to discrimination against competitors. The FTC reportedly believes that Google Korea has forced game developers and publishers to release their products solely on the Google Play Store, which resulted in discrimination against other application stores such as One Store.

The FTC’s measure against Naver is the first time that the regulator has made a move on an ICT platform company since chairwoman Joh Sung-wook took office in September.

Joh has previously said that she will regulate unfair activities by platform companies such as Google, Apple and Naver.

The antitrust body launched a special team focused on abuses by ICT platform companies last Friday.

BY KIM KI-HWAN [chae.yunhwan@joongang.co.kr]