Clarification of Ambiguous Criteria Such as 'Ranking Order'
[Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission (FTC) is pushing for legal amendments to prevent cases like Naver Shopping, which was penalized for manipulating search algorithms to favor its own products.
According to government authorities, the FTC plans to include measures to prevent search result manipulation in two proposed legal amendments: the Electronic Commerce Act, which addresses platform and consumer issues, and the Online Platform Fairness Act, which regulates the relationship between platforms and merchants.
First, the FTC is considering a provision in the Electronic Commerce Act amendment that would require online platforms to transparently disclose the criteria for shopping search results or product exposure rankings.
This move responds to criticisms that the product sorting criteria of major online platforms such as Naver's 'Naver Ranking', 11st's '11st Ranking', and Interpark's 'Interpark Popularity' are ambiguous, causing consumer harm.
There are also concerns that unclear product sorting criteria in clothing shopping malls can easily lead to deceptive practices. The well-known women's clothing mall 'Imvely' manipulated the order of search results and product reviews, and 'Haneulhaneul' manipulated the order of review exposure to favor themselves, resulting in sanctions from the FTC.
If the Electronic Commerce Act is amended, not only giant platforms like Naver but also small-scale shopping malls will likely have to disclose, through separate icons, whether the 'popularity ranking' product sorting criterion is based on sales volume, and if so, whether it is based on performance over one week or one month.
On the 23rd, FTC Chairman Cho Sung-wook explained the direction of the Electronic Commerce Act amendment at a symposium on 'Consumer Issues on SNS Platforms,' stating, "We aim to secure transparency in search results and rankings to guarantee consumers' rational choice rights."
The Online Platform Fairness Act, which regulates the relationship between online platforms and merchants, includes provisions requiring platforms to mandatorily state in contracts with merchants the criteria for how products and services are exposed or the order of exposure.
Online platforms must also disclose to merchants the impact of the commissions they pay on search results or exposure rankings and order.
The FTC intends to comprehensively overhaul the Electronic Commerce Act and enact the Online Platform Fairness Act to prevent deceptive practices such as manipulation of exposure rankings in advance.
An FTC official said, "Previously, shopping malls or online platforms did not disclose objective criteria related to search results or rankings to consumers," adding, "We are considering ways to enable such disclosures."
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