Naver Clings to US Shopping Giant eBay

[Asia Economy Reporter Bu Aeri] The US internet giant eBay is drawing criticism from the industry for adopting a strategy of persistently targeting Naver whenever necessary in its domestic business.

According to related industries on the 17th, the background behind the Fair Trade Commission's recent imposition of a 26.7 billion KRW fine on Naver for favoring its own shopping service by abusing its monopoly position was eBay. The Fair Trade Commission's investigation into Naver began in 2018 when eBay Korea filed a complaint. eBay Korea is the largest e-commerce company in Korea, operating Gmarket, Auction, G9, and others.

When Needed, "Naver is a 'Competitor'"

eBay Korea's strategy of utilizing Naver dates back to 2011. eBay Korea argued for the approval of the merger between Gmarket and Auction on the grounds that Naver (then NHN) was about to enter the open market sector and that the open market could become competitive at any time.

At that time, the Fair Trade Commission approved the merger, supporting eBay Korea's claim by stating, "NHN has officially declared its entry into the open market through the media, making it highly likely that the market will become more competitive in the future." With the Fair Trade Commission's approval of the merger between Gmarket and Auction, a giant company named eBay, holding a 70% market share in the open market, was born.

Changing Stance When Disadvantageous

However, recently, as eBay Korea has been pushed into a defensive position with declining profit margins due to the entry of large corporations such as Shinsegae and Lotte, as well as domestic and foreign IT companies like Naver, Kakao, and Coupang into the e-commerce market, it has rapidly changed its stance. It claims that Naver is a referee, so it is problematic for them to compete in the same game. The issue is that Naver, which had only played the role of a referee through its shopping search service, has recently started acting as a 'player' by charging commissions through its Smart Store.

Industry insiders view that eBay Korea, feeling pressured by Naver's commission rates which are among the lowest in the industry, is fostering a sentiment to exclude Naver from the open market. Eventually, eBay Korea went as far as reporting Naver to the Fair Trade Commission, alleging that Naver favors its own services in exposure. However, the Fair Trade Commission appears to have sided with eBay Korea once again, imposing a 26.7 billion KRW fine on Naver. Naver is expected to contest this in court.

Regarding this, an industry official said, "In a data-driven era, since domestic platforms are directly linked to the growth of the domestic market, losing a platform from an industrial perspective is tantamount to losing growth momentum," adding, "Before regulating platforms, the government needs to carefully examine whether there has been harm to small domestic companies and consumers rather than protecting global giants."