Naver domination under pressure

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simplifiednaver.jpgMr TJ Kim, the CEO of NC Soft, said that the market domination and walled-garden business model of Korean portals are stifling innovations in the Korean internet industry. In other words, Naver is so dominating across so many different areas, and at the same time keeping its “all data in, no data out” strategy, and therefore small startups are left with little business opportunities.

NC Soft is, as I described in my previous post, an online game powerhouse famous for its Lineage games and is recently pushing out “open web” based new services through its Openmaru subsidiary.

It looks like the internet services market is getting increasingly consolidated, in other countries like Japan and China as well as in Korea, as the whole industry gets more and more commoditized. The startup people I know in Japan always say the same things as Korean internet entrepreneurs do – such as “The entire market is in the hands of Yahoo and Rakuten, and there’s nothing left” or “There should be more internet startup entrepreneurs in Japan, but the window of opportunity for internet startups is not very wide, with the market uptake of new internet services being low.” China seems to be a bit of different story and startup actions there seem more bustling, but the overall market share of big players like QQ seem to be increasing in China too.

So perhaps we can’t just blame the increasing market domination of big portal players, as the market consolidation around the “Big 3” might be the natural path of evolution for the internet industry, as it was for other industries such as car manufacturing, personal computers, or arguably all other industries.


Yes, the domination itself might be both “natural” and even worth some credit, but what about the openness?

That indeed is clearly an issue. Time and again, it’s been proven many times that, in the internet industry, open is a much better model than closed – in both ethical and practical terms. Umair Haque probably said “open beats closed” about 34,879 times, and although I don’t agree him all the time, I’m with him on that premise 100%. Who holds the biggest market share in the server software market, between open source and a single company with a walled garden model?

So, to conclude, Naver is evil – But it’s not the company’s bigness that makes it evil (bigness and market domination is part of the industry evolution so it’s neither harmful nor unnatural), it’s only the closeness that makes it evil. Someone will have to do something about it.



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