South Korea Internet giant NHN under antitrust probe

The Fair Trade Commission has held on-site inspections and collected documents from the headquarters of the operator of popular portal, Naver, to investigate accusations of unfair business practices.
Written by Ellyne Phneah, Contributor on
NHN has a dominant market share of over 70 percent in the local portal market.

The Fair Trade Commission (FTC) is investigating NHN Corporation, the operator of portal Naver for possible unfair business practices.

According to The Korea Times on Wednesday, the antitrust regulator launched the investigations officially on Monday, went to the Internet giant's headquarters in Bundang, Gyeonggi Province, and held on-site inspections and collected documents, an FTC spokesperson said, but declined to give further details, only saying the probe was ongoing.

NHN is estimated to have a dominant market share of over 70 percent in the local portal market, ahead of rivals Daum and Nate. 

There are reports that the FTC will look into whether the company uses its position unfairly against its partners.
The Korea Times noted NHN had "tremendous power" over advertisers and software developers, among others in the market due to its popularity on desktops, which is increasing in the expanding mobile platforms due to its messenger service LINE.

The regulator had reportedly collected evidence before the investigations to prove NHN was a dominant player in the market, with significant power gained by throwing its weight around, the report noted.

When approached by ZDNet Asia, a NHN spokesperson said, "We will cooperate fully with the FTC's investigation process. Please understand that we cannot provide details while the investigation is going on."

South Korea's minister of science, ICT and future planning Choi Moon-ki, also expressed concerns about NHN's dominant market position at a press conference at the government complex at Gwacheon in the Gyeonggi Province on Wednesday, a separate report by The Korea Times noted.

"NHN has focused too much on external growth under the helm of a young CEO. NHN should think more about making a social contribution to society. It has too much market power," Choi said.

NHN had been heavily criticzed last year for extending its power into other markets such as real estate and wholesale markets other than its core Internet business, which many say kills smaller firms, the report noted. However, the Internet giant has been trying to compensate for its image as a monopoly holder in the market by offering higher ratio returns to developers over earnings and holding forums for them, and strongly supported helping small and midsized businesses (SMBs).

In 2008, the FTC also imposed a fine of US$227 million won (US$203,633) against NHN for the same antitrust allegations, the largest ever for a portal company, The Korea Times noted. The Seoul High Court took NHN's side though, but the trial is still ongoing.

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