One Year Since HyperClovaX Launch... Naver Search Market Share Declines↓

56% Last Month... 5.5%P Decrease Compared to Early This Year
Google, Bing Market Shares on the Rise

Naver CEO Choi Soo-yeon unveiled the large language model (LLM) 'Hyper ClovaX' at the 'Team Naver Conference Dan23' held on August 24 last year at the Grand InterContinental Seoul Parnas in Gangnam-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

Naver's large language model (LLM) 'HyperCLOVA X' is approaching its first anniversary since launch, but its influence on users appears to be limited. Despite aiming for 'ultra-advanced search experience' and 'expansion of the AI ecosystem' at launch, Naver's search engine market share has actually declined.

According to web analytics firm Internet Trend on the 2nd, as of the 31st of last month, Naver's domestic search engine market share was recorded at 56.46%. This is a decrease of 5.50 percentage points compared to 61.96% on January 1st of this year. Although Naver still holds the highest share in domestic internet search, its influence is gradually diminishing.

Naver's market share showed an upward trend from August 24th last year, when HyperCLOVA X was launched, until the end of the year. During that period, the share increased from 56.11% to 60.70%. However, the industry evaluates that the decline in market share this year is due to a lack of killer services that could attract users. Naver introduced several services linked with HyperCLOVA X, including the generative AI-powered search service Cue:, the conversational AI agent service CLOVA X, the advertising and recommendation service CLOVA for Ads, and the AI writing service CLOVA for Writing for creators, but these failed to generate the expected response.

As Naver's search share declined, big tech search engines have increased user inflow, causing a shift in the market. Especially with the active integration of AI and search engines, Google and Microsoft (MS) are showing strong performance. Google, which is pre-installed on the Android operating system (OS), is utilizing the LLM Gemini. Google's market share increased by 7.18 percentage points this year, from 28.30% to 35.48%. Microsoft's search engine Bing, equipped with OpenAI's GPT-based AI model Copilot, is increasing its share not only domestically but globally. In South Korea, it rose from 1.79% to 3.59%, and globally, Bing's search engine market share surpassed 11.5% in June this year, up from the 8% range in June last year.

Naver is focusing on achieving results from services applying HyperCLOVA X in the AI and search engine market. A Naver representative explained, "(We are) in the process of applying (HyperCLOVA X) one by one." Additionally, Naver is expanding its presence in the global market by emphasizing Sovereign AI. Sovereign AI is a compound of Sovereign, meaning autonomy, and AI, referring to artificial intelligence, meaning 'AI with sovereignty' or 'AI sovereignty.' This reflects caution against the spread of AI developed primarily in the languages and cultures of leading countries like the United States. Naver aims to leverage AI built on the unique culture and identity of each region and country as a weapon for overseas expansion and cooperation.

Naver has signed a partnership with Aramco Digital, a subsidiary of Saudi Arabia's Aramco, to develop Arabic LLM-based Sovereign AI. In May, Naver also signed an agreement with the Philippine internet service provider Converge ICT Solutions to promote the Philippines' digital transformation using Sovereign Cloud and AI. Furthermore, on the 12th of last month, Germany's Deutsche Telekom visited Naver's headquarters to discuss Sovereign AI.

However, there are evaluations that Naver's capital and technological capabilities are still insufficient to compete with global big tech companies like Google and MS. Since Sovereign AI is still in its early stages, it is too soon to expect immediate results. Kim Myung-joo, president of the International Artificial Intelligence Ethics Association and director of the Barun AI Research Center at Seoul Women's University, said, "As AI integration begins, Google and Bing's search shares are increasing, leading to a technology race. Although Naver is a large company domestically, it lags behind global big tech in innovation and talent acquisition."

Moreover, there are claims that the Line-Yahoo incident is a negative factor for Naver. Although the messenger Line has established itself as a representative platform in Japan, Taiwan, and Thailand, this incident could cause Naver to lose its foothold for expansion. Since declaring its departure from Naver, Line Yahoo has been strengthening cooperation with OpenAI and others.