Light warning issued against giant portal’s monopoly

A recommendation issued by the Science, ICT and Future Ministry through the “Research taskforce to improve Internet search service policy” makes one wonder whether the ministry has any serious intention to root out abusive practices of monopoly by Naver, the giant portal in Korea. Despite media and civil society having repeatedly raised issue with damage and ill effects wrought by Naver as the “super master,” the recommendation failed to identify accurate causes of market disorders and treatment to address them, and only contains instruction to Naver to self-regulate on its own. The ministry reportedly formed the taskforce on the Internet monopoly Naver, which controls 74 percent share of the Korean Internet search market, and held 14 meetings and forums with small and medium-sized venture firms and search service providers to gather opinions, but has only come up with this measure that would generate little, if any, effect.

We wonder how seriously the taskforce considered consumer interest and whether it had any intention to root out Naver’s abuse of market dominance, while drafting the recommendation. If the government remains indifferent and seeks to leave the problem on the Internet industry to resolve on its own, we wonder why it has wasted time and energy thus far.

One of the most notable measures in the recommendation is the obligation of Internet portals to disclose search principles once a year on a voluntary basis. The ministry requires the portal sites to specify advertisements as “ad” to prevent chaos resulting from the listing of “advertisements” together with “search results” without specifying them. It thus only suggested principle, and stopped short of instructing how the portals should specifically act. The European Union investigated Google on the charge of violating the Anti-Trust Act for the latter’s listing unpaid information in a way unfavorable for such information. Compared with this, the ministry’s recommendation is close to a kind request that suggests the portals “to follow but is still okay even if not followed.”

The provision “Portals are requested to exert efforts to display the originals of Internet contents” in the recommendation is designed to crack down on blogs, cafes, and Jishikin service, which have illegally reproduced or republished information, but the effect of this regulation is questionable considering the soft wording “exert efforts.” The suggested ways for the portals to coexist with the (broader) Internet industry is also ambiguously and abstract at best. The ministry only suggests in the recommendation that the portals prepare ways of cooperation in the aspects of protection of intellectual property and ideas, collaboration in technology service and market development and management assistance for small and medium-sized players.

If the regulatory authority presents a de facto “paper tiger” remedy despite mounting public outcry demanding correcting of Naver’s abuse of market dominance, Korea will have a long way to go before creating a sound ecosystem in the Internet sector. The Internet industry cannot be an exception to regulation of monopoly. Rather than only issuing a recommendation calling for self-regulation, the ministry should come up with a fundamental and effective measure to root out unfair practices committed by the Internet monopoly Naver.