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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] South Korea’s Supreme Court has ruled that all corrective orders and fines imposed on Naver by the Korea Fair Trade Commission (KFTC) for allegedly manipulating its video search algorithm to favor its own video platform must be annulled.
According to legal sources on the 30th, the Supreme Court’s First Division (Presiding Justice Seo Kyung-hwan) overturned the Seoul High Court’s earlier ruling, which had partially sided with Naver, and remanded the case with instructions to rule entirely in Naver’s favor.
The KFTC had argued that when Naver revised its video search algorithm in August 2017, it provided related information solely to its own service, Naver TV, while withholding it from competitors such as GomTV and AfreecaTV—constituting unfair distortion of search results.
The agency further claimed that Naver designed the algorithm to give additional weighting to videos listed in the “Naver TV Theme Zone,” causing them to be displayed more prominently than competing content. In January 2021, the KFTC issued a corrective order and imposed a fine of KRW 300 million.
In Naver’s appeal, the Seoul High Court ruled that failing to disclose algorithm changes to competitors could not be deemed improper customer inducement and canceled that portion of the penalty. However, the court upheld the KFTC’s second charge, determining that awarding extra points to Naver TV Theme Zone videos constituted deceptive conduct by inducing consumers to believe the videos were superior.
The Supreme Court disagreed, rejecting this remaining justification as well.
The Court stated that Naver, as a provider of video search services, is entitled to design its search algorithms based on its own value judgments and business strategy, and is not obligated to publicly disclose such internal decision-making.
It added that even among Naver’s own video content, only videos in the Naver TV Theme Zone received extra weighting, and these had undergone additional internal review processes before being published. This suggests a reasonable basis and potential consumer benefit behind the differentiated treatment.
The Supreme Court also noted that for improper customer inducement to be established, consumers must be misled into believing that the company’s content is “significantly superior” to that of competitors—a threshold the Court found was not met.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
