[Asia Economy Reporter Eunju Lee] The final ruling by the High Court on the controversy surrounding the 'video algorithm manipulation' between Naver and the Fair Trade Commission (FTC) will be held next month. The FTC believes that Naver restricted market competition by adjusting the video service search algorithm without informing competitors. Attention is focused on the court's judgment regarding major platform companies prioritizing their own services through algorithm adjustments to limit market competition.
According to the related industry and the FTC on the 13th, the High Court's final ruling on Naver regarding the video search algorithm adjustment will be held on the 9th of next month at the Seoul High Court Annex 1. The ruling, originally scheduled for the 12th, was postponed twice by the court. The ruling concerns the cancellation lawsuit following the FTC's corrective order and a fine of 200 million KRW in 2020, claiming that Naver distorted search results by giving extra points to its own videos and not actively informing competitors about the search algorithm revision.
The key issue is whether the court will recognize Naver's unfair practices pointed out by the FTC. The FTC views Naver's video algorithm adjustment as an 'unfair act' under 'unfair customer inducement by deception.' It sees Naver as restricting market competition by not sharing basic information such as algorithm operations to increase traffic to its own video service. Unlike the Naver Shopping case, which was judged as an 'abuse of market-dominant position,' the FTC did not consider Naver a market-dominant business operator in the video market. The FTC explained that considering competitors like YouTube and KakaoTV, it was difficult to judge Naver as a 'market-dominant business operator' in the video market.
According to the FTC, Naver did not inform competitors when it revised its video search service algorithm in 2017. On the other hand, it engaged in 'self-preferential treatment' by preparing measures such as creating 'keyword input guides' for its own video departments to ensure Naver TV videos were effectively exposed in searches. Furthermore, it directly awarded extra points to videos listed in the 'Naver TV Theme Hall' among its own videos. These extra points were only available to Naver TV videos and could not be received by competitor platform videos, even if they were of high quality. Naver argued during last year's trial that "extra weight is given to high-quality content."
On the 14th, the FTC won a lawsuit against Naver regarding the 'corrective order and 26.7 billion KRW fine for preferential treatment of its own products by adjusting the Naver Shopping search algorithm.' The court sided with the FTC's judgment that Naver, as a 'market-dominant business operator' in the comparison service market, transferred its dominance to the 'open market' and restricted market competition. A fair trade law expert said, "This case also focuses on market competition restriction due to platform self-preferential treatment," adding, "Especially, among unfair acts, even if direct customer inducement is not proven, if there is sufficient concern that inducement was intended, (Naver's market competition restriction charges) can be recognized."
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