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Naver, a giant portal operator, was caught by the Fair Trade Commission for ‘manipulating’ a search algorithm to suit its own interests, and was fined 27 billion won. Another case has emerged that further amplifies the bias controversy surrounding Naver’s article display algorithm. Naver announced a lawsuit against the FTC.
On the 6th, the Fair Trade Commission said: “Naver artificially adjusted and changed the search algorithm in the shopping and video search service, placing its products and services (products from smart stores, Naver TV, etc.) on the top of search results and competitors It was decided to impose a penalty of KRW 26.7 billion along with a corrective order. “The FTC found that” Naver unfairly adjusted the ranking of search results to mislead consumers who believed that the search results were objective and distorted the competition between the open market and the video platform market. “
According to the Fair Trade Commission, Naver artificially lowered the exposure ranking by assigning weights to competitive open market products such as 11st, Gmarket, Auction and Interpark before and after the launch of its open market in April 2012, and the sales index applied to their open market products. The exposure ratio was increased giving additional weight to. Products with higher exposure rankings click more, leading to increased product transactions. As a result, Naver’s share of the open market share (based on the transaction amount) increased more than fourfold, from 4.97% in 2015 to 21.08% in 2018 (as of the first half).
While Naver reorganized its video algorithm in August 2017, it provided a demo version to Naver TV, tested it, and began to systematically supplement it by preparing a ‘keyword entry guide’ through affiliates, while simultaneously notified competitors such as Africa TV and Pandora TV about the reorganization. The FTC explained that no. For Naver TV, the number of Naver TV videos exposed to the top of search results within a week after the reorganization increased by 22% compared to the week before the reorganization, while the number of exposures from other companies decreased at the same time.
The Fair Trade Commission determined that Naver was “disrupting the business activities of other business operators during abuse of market dominance” and “discrimination and unfair customer attraction among unfair business activities.” This is the first case of sanctions against the so-called “company preference” when adjusting and changing the search algorithm.
On the same day, Naver published its position data and emphasized that “the main reason users use Naver Shopping is the convenience of comparing and buying similar products sold in several shopping centers at the same time. “Naver uses a shopping search algorithm. It has been improved from time to time, and there were more than 50 improvements between 2010 and 2017 when the survey was conducted, and the FTC decided that only five of them were randomly selected and found that Naver Shopping attempted to exclude competitors. ”
Naver also added weights to all shopping centers that provide accurate information on sales performance for highly reliable search results. “The Fair Trade Commission assigns weights only to the sales index that Naver applies to its open market products, so the exposure ratio of the product maliciously pointed out was elevated.” The reorganization of the video search algorithm was also “the product of an effort to provide the best search results to users,” and it contested that it was an activity not related to “preferential treatment from the company.”
Naver argued: “It is the nature of the search service to show results that match the user’s search intent, and Naver has focused on this intrinsic value for the past 20 years and has been selected by users.” He said: “We are very sorry to make a decision that essentially violates the commercial operator’s business activities,” he said. “Naver will not agree with the decision of the Fair Trade Commission and will fight injustice in court.”
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