Korea Stumbling Towards Monopolistic Situation In Internet Search – Google Nowhere To Be Seen
2013 9월 26

The Background

For those who don’t know it, the internet situation in South Korea is very different from what you might expect. Most impressively, Google, only claims around a 2% share of the search market. So who services this population of 50M, one of the most connected and tech savvy in the World?

Naver, a subsidiary of Korea’s largest internet company NHN Corp, has controlled over 70% of the Korean search market since 2011, and that figure currently hovers above 80%. The site was launched in June 1999 by ex-Samsung employees, and it debuted as the first Web portal in South Korea that used its own proprietary search engine.

The other major player is Daum (15% search market), also an internet portal site, established in 1995. Daum offers many Internet services to web users, including a popular free web-based email, a messaging service, forums, shopping, and news. The popularity of Daum stems from the range of services it offers, but also from the fact that it was the first Korean web portal of significant size.

Google has never taken off in Korea, and currently accounts for only 2% of web traffic. Yahoo had held on in Korea for almost 15 years, but closed its Seoul office in January 2013.

Naver Tightens its Grip

In Q2 2013 Naver saw net rises in revenue due to robust growth in its ad, and messenger businesses, jumping 7.5% from a year earlier. As a result Naver’s net profit reached 123 billion won (US$110 million) in the April-June period, compared with 114 billion won the previous year, Naver, formerly known as NHN, said in a regulatory filing.

Daum Loses Market Share

In contrast to Naver’s continued growth, Daum has seen its second-quarter profits contract by 23% on declines in its display advertising. Net profit came to 178 billion won (US$160 million) in the April-June period, compared with a profit of 230 billion won a year earlier.

Who Cares?

The main difference between Google and Naver is that results on Google are organic, whereas on Naver results are driven by internal traffic and paid ads, meaning that Naver has very considerable control over results, and is able to direct users to its own sites and affiliates, rather than to external information providers and websites. This makes it incredibly difficult for anyone who doesn’t play by Naver’s rules to get any traffic in Korea at all. The below table demonstrates the problem, which is now being raised to the government by companies who fear further monopolization by the search giant. Watch this space. It is also a major frustration for tech startups who rely on web traffic, but want to build global companies: If Google is used as the default search facility a considerable domestic web presence can remain almost unseen to Korean users.

Search Traffic

Google is on the left and Naver on the right. Organic search results are in blue and Naver generated content is in green. Paid ads are in red. Image courtesey of Mark Kum.


0 0 votes
Article Rating
beSUCCESS is a professional media company with a particular focus on startups and tech industry | beSUCCESS는 국내 기업의 해외 진출을 지원하는 미디어 회사로, 실리콘밸리를 포함한 전세계 테크 트렌드와 스타트업 뉴스, 기업가 정신 등 국내 스타트업의 인사이트 확대를 위해 필요한 외신 정보를 직·간접적으로 제공할 뿐만 아니라, 한국의 스타트업 생태계와 출시 소식 등 주요 뉴스를 영문으로 세계 각국에 제공해 한국 스타트업의 글로벌 성공을 지원하는 '연결'의 역할을 합니다.

Inline Feedbacks
View all comments