(EDITORIAL from Korea Times on June 18)

The recent revelation of illegal and deceptive practices by Coupang, Korea's leading e-commerce firm, is alarming. The Fair Trade Commission (FTC) has imposed fines totaling 140 billion won ($101 million) and filed a complaint with the prosecutors' office. This action follows allegations that the company manipulated its in-app algorithm to favor its own private brand products. The antitrust watchdog also accused Coupang of mobilizing its employees to artificially boost search rankings and give high ratings to its own goods, thereby deceiving consumers through fraudulent means. The fine, the largest ever imposed by the FTC on a single local retailer, is equivalent to 2.5 times Coupang's operating profit in the first quarter. This indicates that the FTC determined Coupang's tactic of prominently displaying its own products on its marketing platforms, regardless of objective data, amounted to consumer deception. For example, searches for mineral water often displayed Coupang's Tamsasoo brand first. Coupang was found to have engaged in such unlawful practices for over 60,000 items from February 2019 until July last year, primarily involving its own products and directly purchased goods. Consumers tend to focus on the most viewed products when shopping online. In this vein, Coupang's practice of prioritizing the private brands and directly bought products ahead of others by algorithm exploitation could mislead consumers. The FTC noted numerous cases where products that ranked below 100 were elevated to the top spot after algorithm manipulation. Worse still, Coupang did not clearly distinguish between its private brands and other products for consumers. The FTC also discovered that Coupang fabricated reviews, which are crucial for consumers when making purchasing decisions. The retailer formed a "Coupang experience group" comprising over 2,000 employees who posted more than 70,000 comments and rated products an average of 4.8 out of 5, thereby influencing consumer purchases. Coupang even prepared guidelines for empl oyees to stress the merits of those products in the reviews. In response to the FTC's decision, Coupang has threatened litigation, describing it as "unjust and excessive." The company argues that the decision is anachronistic, disregarding the right of consumers to choose in the digital era and also stifling innovation. Coupang has also threatened to cancel plans for constructing distribution centers in Incheon, Gyeonggi Province and Gimcheon, North Gyeongsang Province, to protest the FTC's decision. Coupang maintains that the FTC's ruling violates its right to freely recommend and sell products to consumers. "If the FTC prevents such product recommendations, Coupang's direct services, including Rocket Delivery, will become impossible. The FTC's action will harm consumers," a Coupang executive told The Korea Times. Yet the FTC's decision is a legal action taken against Coupang's practice of deceiving clients. Coupang should first issue a sincere apology to consumers. As the No. 1 domestic e-commerce firm, and the second-largest in home delivery, over-the-top (OTT) and food delivery, Coupang has faced criticism for numerous unlawful managerial activities and harsh labor practices, including the death of a delivery worker. It has also been suspected of compiling a blacklist of 16,450 contract-based employees to prevent their reemployment and of increasing subscription fees by 58.1 percent within 15 days, raising concerns about potential market abuse. Measures are urgently needed to regulate massive platform companies. The FTC's latest action was belated, coming 42 months after it commenced investigations into Coupang's alleged irregularities. During this probe, Coupang managed to solidify its monopolistic status in e-commerce while its competitors declined. The Yoon Suk Yeol administration should designate gigantic platforms like Coupang as "dominant enterprises" to cope effectively with the possible unfair practices and bolster fair competition among these companies. Source: Yonhap News Agency