Google Under Scrutiny in Korea

Even in this information age, the major nations and cultures of East Asia often seem inscrutable to the mainstream western press. Since mid-April, the international media, led by business writers and technology blogs have been abuzz with news from South Korea. There, two leading internet portals, Naver and Daum, had lodged a complaint against Google with the Korea Fair Trade Commission, the nation’s competition and antitrust regulator. They alleged that Google unfairly used its status in the mobile industry to make it difficult or impossible for competing search services to be installed on Android devices in Korea. By forming a marketing partnership with major smartphone producers, so the complaint reasoned, Google had unfairly created a new ecosystem in which the Android system was offered free as a way to control the market.Furthermore, Google’s 15-20 percent share of Korea’s mobile search market could not possibly reflect the free choices of mobile carriers and manufacturers since Google controls only a small single-digit share of fixed line internet search in Korea.

Google responded to the complaint with a statement that “carrier partners are free to decide which applications and services to include on their Android phones.” However, as widely reported thus far, news of the complaint against Google in South Korea fits into a familiar and most plausible story line. Many reports have explicitly linked Korean developments to the investigation of Google launched last year by the European Commission, and the complaint filed earlier this year by Microsoft. While this story line may be accurate, as far as it goes, it does not go far enough. The developments in Korea deserve closer scrutiny with a bit more historical and cultural context. The following elements should be added to the story to more adequately understand what is occurring with the complaint against Google.

First, an acknowledgement that South Korea led the world in constructing nationwide, fast, fiber-optic broadband internet networks. When U.S. Vice President Al Gore spoke in 1994 of the need for an “information superhighway”, Korea acted the following year by implementing its ambitious Korea Information Infrastructure (KII) plan. By 1999, the year Naver was launched, PC Rooms had spread throughout Korea and with them such popular multi-player online games as World of Warcraft. The Korean social networking service Cyworld also debuted that year, half a decade before Facebook was invented!
Second, while Naver is unquestionably Korea’s most popular internet portal, it is not at all an internet search engine like Google. Naver’s most popular feature, called “Knowledge-in” allows Koreans to input questions that are then answered by other Koreans online. Moreover, regular searches on Naver return pages on which paid advertisements top the results. When compared with Google, Naver appears as a large, Korean-language intranet with social networking and collective intelligence capabilities, rather than a comprehensive internet search tool. Its success underscores the centrality of language to web-surfing behavior.
Third, although much of the international reporting mentions the rapid diffusion of smartphones in South Korea, with over ten million currently in use, some relevant history is generally ignored. Although introduced in the U.S. in mid-2007, Apple’s iPhone did not reach the South Korean market until two and a half years later! The combined interests of Korea’s mobile service providers, large handset manufacturers, and government policies led to this unusual set of circumstances. Although Korea was the first nation in the world to commercialize CDMA technology and build nationwide networks with it, public use of these 3G data services remained at extremely low levels through mid-2009, even as the iPhone was proving immensely popular all around the world. Consumers were put off by the high cost of such services, while Korea’s mobile service providers feared the loss of voice revenues to the new VOIP services like Skype.
Finally, the extraordinarily rapid diffusion of smartphones here in South Korea, owing partly to pent-up demand, has a decidedly youthful cast. The same young people who were loading Skype onto their iPod Touch devices while awaiting the arrival of the iPhone in 2008 and 2009, and who studied English more avidly than their parent’s generation, were early adopters of the iPhone and Android devices.
Interpreted within the above background context, the recent complaint against Google in South Korea has alternative explanations that do not fit so neatly with the story line advanced by most international media. It arose partly out of a natural reluctance on the part of Daum and Naver to see their market share internet search slipping away with the introduction of smart phones. Other explanatory factors are language and more global patterns of internet use by young people. Google’s growing share of Korea’s mobile search market may in fact be driven by web surfers who are discovering a great deal of English and other language content on the wide internet beyond the current search capabilities of Naver. This would also explain why it is not only Google’s share of search that is increasing with the adoption of smart phones, but also use of Facebook and Twitter, social marketing innovations that, like Google, originated in the West.

Language and Internet Use in Korea

An article in The Korea Times today touches on a topic which was the subject of many earlier posts on this blog (for example this one),  the important role of language in conditioning the web-surfing patterns of most Korean citizens. It notes that the internet has become the first source of information for many people, but expresses doubt that most Koreans make use of most of the information available on the web.“Text in Korean makes up less than 1 percent on the Internet. The remaining 99 percent has been useless,” says Lois Kim, head of PR and marketing for Google in Korea.  The article then proceeds to note progress in machine-translation technology, led by Google.  Improvements in such technology promise to open up a vast new world of content for Korean netizens.  I'm wondering if good translation alone will have this result or if there is more to it, such as cultural preferences for activities, topics, and so forth.  Comments welcome.

Google versus Naver in the Mobile Broadband Era

I read an interesting short article in Telecoms Korea today that confirmed my thinking.  To be specific, I thought that the introduction of the iPhone and Android-based phones in Korea would quickly begin to erode Naver's monopoly on web-based search here in Korea.  That appears to be what is happening.  According to the article "Although Naver is a leading search engine on the web, NHN has felt threatened from Google in conjunction with the expansion of Android-based smartphones in the local market. Google services, including mobile search, are offered by default on Android smartphones and the iPhone, and Google is gaining popularity with Korean mobile users and on the web."  Enough said. 

More on Naver versus Google in the Mobile Market

The Korea Herald carried an article that provides some interesting detail on the changes taking place in internet search with the introduction of the iPhone and Android phones here.  Although Naver is still far ahead of Google in both the PC and mobile web market, the gap is smaller in the mobile arena.

Google, which held a single digit share in the PC web market, grabbed a 23.1 percent share in the mobile web market in January, according to the local market research firm Matrix. Naver controlled 82.6 percent of mobile web usage that month.  However, I suspect these figures lump iPhone and Android users with users of the older feature phones that still predominate.  Also, as Hugo Barra, Product Management Director at Google noted, with Android devices coming to Korea a whole new ecosystem of cloud computing based applications will be born.

Naver Complains of Google Monopoly in Smartphones!

NHN, the provider of South Korea's popular Naver search service, is unhappy with the smart phone market, where it claims rival Google is squeezing other companies out of business.  Samsung Electronics Android phones set Google as the default search engine, while Apple's iPhones use the Safari browser in which Google shows up by default.  NHN CEO Kim Sang-hun said it is "virtually impossible" for competitors to enter the market as only Google is connected.  "Users must be able to choose which search engines to use."   For the full story see today's Chosun Ilbo English edition.

I have commented extensively on Google's lack of success in the Korean market in earlier posts.  Naver does not really search the internet, but rather provides social information of value to Koreans, in the Korean language, and within what is essentially a Korean intra-net within the much, much larger internet.  I still stand by my earlier  arguments, but would only add that Google's services go well beyond search.   Google Earth (which is not available on the iPhone in Korea--why?), Google maps, Google Books and an array of other content and services are attractive to smart-phone users.  Over the past two and a half years, while Naver was building up its business within the Korean-language intranet with its Korean-language only service, Google was investing significantly in location-based services, and other services relating to books, scholarly documents, cloud-based applications, to name just a few.

"iPhone Woes for Foreigners" Symptom of a Larger Problem

I started my newspaper reading this morning with an article in yesterday's Joongang Daily entitled "iPhone Woes for Foreigners."  Since I am a foreigner living in Korea and I recently purchased an iPhone, I read the article with great interest.  I've lived and worked in Korea continuously for the past 13 years and my wife is Korean.  Nevertheless, it was NOT EASY to purchase an iPhone here.

My understanding is that there are approximately one million expatriate workers in Korea now, and that the number is increasing.  Furthermore, I'm reading a lot these days about how the Korean government is seeking to attract not only foreign investment, but more foreign workers to Korea.  Under these circumstances, it seems counter-productive to make it difficult for foreigners to purchase an iPhone.   Those of you interested in the details of this matter can read the Joongang Daily article.

I simply want to note that the iPhone situation is part of a much larger problem relating to language, culture and mind-set.  Think, for example, of the generally dismal state of banking services for foreigners in Korea.  Alternatively, think of the heavy reliance on and satisfaction with Korean language web content and applications (over 70 percent of Koreans using Naver when Korean-language Google is superior for many purposes).

My recommendation:  Korea should begin to offer special services, across the board, for foreigners who are here teaching English, teaching other subjects, working in industry, or otherwise contributing to the economy and society.  If the worry is simply that foreigners will leave Korea with unpaid bills, it seems to me that could be handled for different categories of customers, in accord with the risk, by using a REFUNDABLE deposit system.

Google Korea to "Koreanize" its Home Page

The Korea Times yesterday notes that Google Korea plans to "Koreanize" its home page!   The article notes that Naver has a 66 percent share of the search market and Daum is in second place with 20 percent.  Meanwhile, Google has only 2.2 percent of the Korean search market.  The article also points out that Google's strength has been simplicity, but that now it is ready to compromise that to make its web page more attractive to Korean users who "have grown accustomed to fancy websites crowded with features."  The article then proceeds to discuss the load time factor, or how long it takes Google's home page to load.  Everyone knows that Google favors speed.   Number three of its "Ten Things" states that "Fast is better than slow."

All of this is interesting, but I don't think it gets to the central point of explaining why Google has such a minuscule market share in Korea.  For insight into that, do a search of this blog for "Google" and read one of my earlier posts on the topic, including this one.    I'd like to repeat some of the main points.

• Naver is not really an internet search engine, since it searches only Korean language materials and ignores most of the information on the worldwide web.


• Korea is one of four countries in the world, including China, Russia and the Czech Republic, that pursue this walled garden approach to so-called "internet search"  Coincidentally, while the rest of the world was enthusiastically adopting an innovation called the Apple iPhone, Korea was content to use its own, Korean-language only mobile services for two and a half years before bring in the iPhone to this market.


• The popularity of Naver versus Google obviously has a great deal to do with language and culture.


• Conclusion:   "Koreanizing" its home page will not do much for Google Korea's market share.  Language, culture and mindset issues are never solved that easily.   Perhaps a more focused approach, simply telling Korean consumers that there is a whole world wide web of English and other language information out there would be more helpful.

More on Naver vs. Google

According to an article in the Korea Times today, Naver takes pride in being one of the planet's few internet companies that can claim to be a "Google Beater."  The other three countries, as mentioned in earlier posts on this blog, are China, Russia and the Czech Republic.

The article further noted that Naver has improved its search results in order to recognize the search habits of individuals so that they can be provided with the type of information they prefer.  As if this weren't enough, the article states that Naver "...doesn't want to hear talk about an open web environment."

Altogether, this article provides convincing evidence that Naver is not really an internet search service.   Rather, it is a walled garden Korean-language database which tells Koreans what other Koreans think about things.  While the internet is global, Naver tends to be national and rather narrowly so.

Contrast Naver's goals with the mission of Google, "to organize the world's information and make it universally accessible and useful."  Google operates in all the world's major languages while Naver excludes all but Korean. This is not simply a matter of language.  It also extends to internet content--books, videos, blogs and all of it.  Naver simply ignores most of the world's information.  Let's assume a user wants to see whether a book has been written about some topic in European history.   Would sh/e use Naver or Google?    I think the answer is clear.

Korean Internet Companies Opening Networks?

Yesterday's article in the Korea Times certainly caught my eye. Daum (www.daum.net ), the country's second most popular portal site, and Paran (www.paran.com ) have announced this month that they are supporting Google's ``Open Social'' initiative. Open Social is a set of application programming interfaces (APIs) developed by Google and other Internet companies like MySpace that aim to create a unified system of tools at different social networking sites and allow interoperability of applications. Industry watchers believe that Daum's commitment in Open Social could start discussions over the development of an open platform and common service standards for Korean social networking sites.

Although Daum has announced support for the Open Social initiative, it is significant that Naver and Cyworld have not, at least not yet.

The Mother of All Search Functions

David Pogue of the New York Times made a point in his e-column today  that reinforces what I've said in earlier posts about search, specifically Google versus Naver .  He begins the column as follows.

"Today's e-column is nothing but a computer tip, but it's a biggie.  It seems obvious in retrospect, but I've got to tell you, it's totally rocked my world:  Use Google search for everything.  Let me explain."

Pogue then goes on to explain why it wastes time and effort to use the search boxes embedded in almost all web sites, when Google has already indexed everything on the web and you can get to where you're going faster by searching directly with Google.  He gives several examples of how it "used to be," before he discovered how Google works.  For example, "Used to be, when I wanted to consult Wikipedia, I'd go to Wikipedia.org, I'd click English; I'd click in the Search box; I'd type 'blu-ray', and click Search. Five steps. . . . . I've been totally wasting my time.  Google blows all of this out of the water."  I agree, and here in Korea the degree to which people begin to use Google, rather than relying only on Naver ,  will be an important indicator of the globalization process.

Russians Dent Google's World Domination? I Doubt It

An article in the Sunday Times declares that the Russians have dented Google's world domination with their search engine Yandex.  According to the article, Russia is one of only four countries where the American search giant fares considerably worse than local services – alongside China, where the internet is controlled by the government, South Korea and the Czech Republic. To “Google it” may be the common way of searching in much of the world but in Russia Yandex holds 55% of the market compared with Google’s 21%.   I haven't checked on the Czech Republic, but suspect that the situation there is similar to that in China, and Korea.   Korea's Naver, provides only Korean language search results and its most popular feature is "Knowledge In," a database service where answers to questions in Korean are answered by other Koreans.  Naver does not actually search the internet.  Neither does Baidu in China or Yandex in Russia.  Read the following description from Yandex's own English language website.

"We operate Russia’s largest internet search engine and are a leading Russian internet and technology company. Our goal is to provide easy access to the wealth of information available online to answer any questions our Russian-speaking users may have. We rely on our in-depth understanding of the Russian language, culture and internet market to provide our users with sophisticated web search and information retrieval services."  In short, Naver, like Baidu and Yandex, do not challenge Google's World Domination because they do not even claim to search the internet.  More on the search issue in later posts.