Naver under probe by law enforcement offices on multiple counts for abuse of power

[Photo by MK DB]

South Korean platform giant Naver has come under scrutiny by law enforcement authorities for abuse of domineering influence on multiple counts.

The economic crime investigation team at Suwon District Prosecutor's Office has recently launched a probe into Naver for alleged interference with business, violation of the Act on Promotion of News Communications, and other charges related to its news service. The team is also looking into another platform giant Kakao for similar allegations.

The case began after Naver and Kakao blocked news articles from local news outlet Yonhap News Agency from appearing on their online news platforms for 32 days from September to October, and then later canceled news feeding contracts due to native advertising, or sponsored news articles.

Spec Watch Korea, a civic organization for monitoring speculative capital, filed a police report against Naver’s chief Lee Hae-jin and Kakao’s Kim Beom-soo in December 2021 with an accusation that the platforms’ actions were illegal.

The police department in charge dismissed the case on July 13 after deciding that crime was not established. But the civic group raised a formal objection, taking the case to the prosecutors’ office.

Korean Lawyers Association in July 2021 filed a complaint with the police against Naver’s management for allegedly violating the Lawyers Act that prohibits a digital platform from proving legal brokerage services. Naver runs a digital platform, called eXpert, which allows users to seek legal, tax, and financial advice from professionals. The association is accusing Naver of breaking the law by charging a commission.

Naver Real Estate, an online realty platform of the internet giant, is also under prosecutors’ probe. The company is accused of preventing its contracted real estate agencies from providing information on real estate properties listed on the platform to others from May 2015 to September 2017.

The prosecutors' office needs to decide whether to file a charge before the five-year statute of limitation expires next month.

On Thursday, Naver shares fell 3.1 percent to close at 250,000 won ($189.25). Kakao closed 1.12 percent lower at 79,200 won.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]