After NAVER was sanctioned by the Fair Trade Commission for allegedly prioritizing its own videos, the Supreme Court sided with NAVER in an administrative suit the company filed, claiming the sanction was unjust. The Fair Trade Commission said NAVER should expose its own videos and external platform videos equally to users, but the Supreme Court ruled, "There is no such obligation."
According to legal sources on the 30th, the Supreme Court's First Division (Presiding Justice Seo Kyung-hwan) on the 6th overturned the part in which NAVER lost in a suit to cancel a corrective order and a penalty surcharge payment order filed against the Fair Trade Commission and sent the case back to the Seoul High Court. The Supreme Court dismissed the Fair Trade Commission's appeal.
In Oct. 2020, the Fair Trade Commission concluded that NAVER artificially adjusted its video search service algorithm to place NAVER TV videos at the top of results and push down competitors' videos, such as AfreecaTV and Pandora TV.
In Oct. 2020, the Fair Trade Commission said that while operating its search service in the video sector, NAVER artificially adjusted and changed its search algorithm to place videos from NAVER TV, which it operates itself, at the top of search results. It said videos from competing platforms such as AfreecaTV and Pandora TV were pushed down. The Fair Trade Commission issued a corrective order and imposed a 200 million won penalty surcharge.
According to the Fair Trade Commission, in Aug. 2017 NAVER overhauled its video search algorithm without informing competitors. It classified some NAVER TV videos into a "theme section," gave them additional points, and actively exposed them to internet users.
NAVER filed an administrative suit, countering that it had provided competitors with detailed guidance on the key information the Fair Trade Commission claimed was not disclosed, and that operating the theme section was to provide quality service.
In Feb. 2023, the Seoul High Court found that part of the Fair Trade Commission's disposition against NAVER related to "distorting the video algorithm" was unjust. The court said, "NAVER can be seen as having provided information in a discriminatory manner by not informing the outside of significant changes," but added, "This alone makes it hard to say NAVER engaged in specific conduct amounting to an unfair transaction."
It said there was no proven effect because there was no significant change in the inflow rates of NAVER's own videos versus external videos. However, regarding the extra points given to videos in the "theme section," it sided with the Fair Trade Commission, calling it an unfair customer inducement.
But the Supreme Court's view differed. The court said, "When (NAVER) provides search results to customers (internet users) through an online search service, it is hard to recognize an obligation to treat videos it provides the same as videos provided by other operators."
On the Fair Trade Commission's claim that NAVER failed to notify competitors of the algorithm change, the Supreme Court said, "(NAVER) can design the search algorithm that determines exposure rankings," adding, "It cannot be said that value judgments and business strategies in detail must be announced to consumers or the outside."
The Supreme Court also said, "There is room to acknowledge a degree of rationality or the possibility of enhancing consumer benefits in giving extra points to (theme section) videos that can guarantee quality."
Along with the video sector, in Oct. 2020 the Fair Trade Commission also issued a corrective order in NAVER's shopping sector and imposed a 26.5 billion won penalty surcharge. NAVER also filed an administrative suit against the Fair Trade Commission's disposition in the shopping sector, and the Seoul High Court found the disposition lawful.
However, on the 16th of last month the Supreme Court overturned the lower court's decision and sent the case back. It found NAVER's algorithm adjustments were not illegal, did not restrict competition, and did not unfairly induce consumers.