Coupang challenges KFTC’s search algorithm sanctions

[Photo by MK DB]

South Korean e-commerce platform Coupang announced its intention to contest the recent sanctions imposed by the Korea Fair Trade Commission (KFTC), labeling the regulatory measure as a misinterpretation of standard global e-commerce practices. Coupang criticized the KFTC’s decision in a disclosure to the U.S. Securities and Exchange Commission (SEC) during the previous week, where it argued that the practices in question are common among online retailers worldwide.

According to the SEC filing dated June 14th, 2024, Coupang reported that the KFTC determined the company’s search ordering practices to be deceptive and in violation of Korean law. But the platform maintains that its search ranking methods are consistent with those employed by e-retailers globally. The company, which primarily operates in Korea but is listed on the New York Stock Exchange via its parent company, Coupang Inc., insists that its actions are neither deceptive nor illegal under Korean law.

Coupang stated in its SEC disclosure it does not believe its practices are deceptive or in violation of Korean law and plans to actively appeal the KFTC’s decision in court.

The KFTC’s decision, announced on June 13th, 2024, accuses Coupang of manipulating its search algorithms and mobilizing employees to prioritize the company’s own private label (PB) products in search results. The commission concluded that these actions constituted deceptive practices aimed at misleading customers. The watchdog consequently imposed a provisional fine of 140 billion won ($101 million) and referred Coupang to the prosecution.

In response to the KFTC’s announcement, Coupang issued a standby statement expressing its disappointment, saying it regrets the unfair fine imposition and criminal report over the platform’s product display practices, which are not challenged anywhere else in the world.