[Exclusive] "Disclose Search Exposure Criteria Such as Clicks and Sales Volume"... Fair Trade Commission Intensifies Pressure on Platforms

Fair Trade Commission: "Click counts and other criteria to be included in standard contracts"
Clarifies "Not demanding disclosure of search algorithms"
Platform industry protests, "Eventually they will demand disclosure of trade secrets"
"Consumer protection may be sidelined"

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC) is pushing to include specific items such as product click counts, sales performance, and purchase reviews that affect online platform search exposure results in the standard contracts drawn up between platforms and tenant companies. The aim is to specify concrete criteria in the contract on how product search results are exposed to consumers. The FTC has so far been cautious, stating only that this would be "delegated in the contract," mindful of industry backlash over exposing trade secret algorithms. However, with the ruling party targeting Kakao, the FTC appears to be strengthening its stance accordingly.

An FTC official said on the 14th, "The 'Act on the Fairness of Online Platform Intermediary Transactions (On-Platform Act)' has been designated as a key bill in this regular session of the National Assembly," adding, "If passed by the National Assembly, the enforcement decree will specify the mandatory items to be included in the standard contract." The official further stated, "Items such as product click counts, sales performance, and number of reviews will be included as criteria determining the order of exposure in search results."

If the On-Platform Act, which includes the standard contract between platforms and tenant companies, passes the National Assembly, the enforcement decree will contain elements that determine the order, form, and criteria of how products or services traded on platforms are exposed in search results. The standard contract is prepared and distributed by the FTC and serves as the standard terms and conditions in the relevant transaction field. Although the use of the standard contract is not mandatory, since it includes all the "mandatory items to be included at the time of contract conclusion" stipulated in the On-Platform Act, most platform companies will have no choice but to adopt and use it.

As the FTC specifies the scope of algorithm disclosure by platform companies, industry backlash is expected to grow. The related industry believes that after the enactment of the bill, the government may force algorithm disclosure at any time through amendments to the enforcement decree. Also, if the items affecting search exposure criteria are clearly disclosed, tenant companies can devise strategies to have their products exposed more frequently. However, there are concerns that focusing solely on search results could push consumer protection to the sidelines. An industry insider said, "If algorithm criteria are disclosed, tenant companies will obsess over optimizing search exposure, which could disrupt market order."

To minimize industry backlash, the FTC plans to conduct research to determine the mandatory items to be included in the standard contract. It drew a clear line that the search algorithm itself is not subject to disclosure. An FTC official emphasized, "The criteria for product exposure order that platforms must disclose will be set at a level already disclosed by leading domestic platform companies," adding, "This means including key transaction conditions such as click counts and sales volume that affect tenant companies' revenue in the contract for disclosure, not disclosing the algorithm itself, which is a trade secret."

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