KOREAN INTERNET GIANT FINED

16 May 2008

Heavy anti-trust penalties levied, but NHN is going to court


According to reports in the Korea Times, the Korean Internet group NHN has been penalised for "...its antitrust behaviours and dubious online gambling business."

The newspaper reports that the Fair Trade Commission ordered NHN, which operates the giant Naver portal and the Hangame online gaming site, to pay 227 million won (almost GBP 111 000) in antitrust fines last week after accusing the group of monopolistic practices in the Internet market. The FTC will be keeping a close eye on the group's future activities.

It is the first time that the FTC has acknowledged NHN's monopolistic status in the Internet market, the newspaper reports. Many expect that the company will be the subject of further prosecution if the FTC and other government agencies take additional corrective action.

NHN accounted for 48.5 percent of the Internet portal market in terms of 2006 revenue, mainly through the Naver portal which processes more than 70 percent of search enquiries from Koreans.

Kim Taek-jin, founder and CEO of NCsoft, an online game company, and Ahn Chul-soo, founder of computer security company Ahnlab, are among the people who have been critical of NHN's behaviour, accusing it of not allowing access to the Naver database by other search engines.

It appears that Naver is not taking the hit lying down, issuing a press statement vowing to take the issue to a court of law, and hiring the largest law firm in Korea as its legal representation. The company's position is that it is unfair to regard the Internet portal industry as a monopolistic market because there is no entry barrier to new players and its services are basically free.

The report suggests that further damage to NHN could result if the government starts to probe its online gambling activities at Hangame, where it is claimed that users play poker and blackjack against each other, using cyber currency. This, it is alleged, can be easily cashed out via online black markets. The police have been asked by unidentified NGOs to investigate this aspect of Hangame's operations, amid claims that the site is deliberately fostering illegal activities.

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