Naver Responds to Fair Trade Commission Fine: "We Did Not Exclude Other Companies... Will Contest in Court"

"Accused Maliciously of Applying Weight Only to Naver Products"
"Granted an Extremely Minimal Level of Additional Points"

[Asia Economy Reporter Jin-gyu Lee] Naver has rebutted the Fair Trade Commission's imposition of a fine, arguing in court that it is unfair to claim that the company altered its search algorithms to favor its own products and services. Naver stated that the revisions to the shopping and video search logic were solely intended to provide users with optimal search results and were not aimed at excluding other companies.

"Naver Shopping Search Logic Revision Unrelated to Excluding Other Companies"

On the 6th, Naver said in a statement, "The revisions to the shopping and video search logic pointed out by the Fair Trade Commission were the result of efforts to provide optimal search results tailored to users' diverse search needs and have no relation to excluding other companies."

Naver also expressed regret over the Fair Trade Commission's judgment recognizing Naver's market dominance, stating, "In the current online commerce market where domestic and international companies fiercely compete, Naver Shopping competes with Danawa, Enuri, and others, but not with open markets. We plan to challenge the unfairness of the Fair Trade Commission's decision in court."

Furthermore, Naver pointed out, "To maintain diversity in shopping search results and provide exposure opportunities for small business products, we improved the shopping search algorithm over 50 times between 2010 and 2017, but the Fair Trade Commission arbitrarily selected only five of these improvements."

They added, "The diversity logic was applied equally to all counterparties contracted with Naver Shopping, including open markets, Smart Store, small and medium-sized shopping malls, social commerce, and general shopping malls," and "Individual vendors in open markets have no contractual relationship with Naver Shopping, and whether to contract with Naver Shopping is the choice of the open market operators."

Regarding the relatively lower search weight given to competing open market products, Naver rebutted, "Weights were assigned to all shopping malls providing sales performance information," and accused the Fair Trade Commission of maliciously claiming that Naver increased product exposure by only weighting the sales index applied to its own open market products.

Regarding the increase in the number of its own open market product exposures from 8 to 10, Naver stated, "It cannot be considered a preferential treatment as it somewhat eased the disadvantageous measures initially applied only to Smart Store." Additionally, Naver emphasized, "Open markets are important partners in the Naver Shopping ecosystem, and there is absolutely no reason to exclude them."

Video Search Also Revised "To Improve Video Search Quality Against YouTube"

Regarding the investigation results that Naver favored its own services by revising video search, Naver explained, "It is the result of efforts to provide users with optimal search results," and "It inevitably varies depending on the business situation."

Naver claimed, "At that time, YouTube dominated the video market, and the market share of all other operators except YouTube was declining, with Naver's search users moving to YouTube in a desperate situation," and "After the search logic revision, Naver TV's market share continued to fall, while only YouTube's share kept rising."

They also clarified, "The video service that the Fair Trade Commission mentioned as receiving additional points is not all of Naver Video but about 20% of Naver TV videos selected through a separate screening process," and "These videos generally have high user preference and resolved copyright issues, and during the 2017 video search algorithm revision, numerous search quality tests were conducted, resulting in only a minimal level of additional points being applied in the search algorithm."

Meanwhile, the Fair Trade Commission imposed a fine of 26.7 billion KRW on Naver for changing its search algorithm to favor its own products and services without notifying competitors. This is the first case of sanction for manipulating search algorithms to engage in preferential treatment of its own services.

This content was produced with the assistance of AI translation services.