Coupang fined US$102 million for manipulating search algorithm
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South Korea’s antitrust regulator has fined e-commerce giant Coupang 140 billion won (US$102 million) for using unfair search algorithms and manipulating product reviews to boost sales of its own private-label items.
The Fair Trade Commission (FTC) also referred the company, as well as one of its subsidiaries, Coupang Private Label Brands (CPLB), to the prosecution for further investigation and ordered the companies to take corrective measures.
Coupang has used” deceptive algorithms” according to the FTC, giving them greater exposure to the retailer’s private-label products on its platform ahead of those from other suppliers since February 2019.
By doing so, at least 64,250 kinds of products have been prioritised, which caused the total sales of such items to soar over 76 per cent during the period.
The company also had 2297 employees write positive product reviews of private-label products since 2019 in an effort to boost its sales.
They wrote a combined 72,614 reviews of 7342 kinds of private brand items so far, which helped those products to be exposed more easily in violation of the Monopoly Regulation and Fair Trade Act.
“Such practices have prevented customers from making reasonable choices and hampered fair market competition,” the FTC said, vowing stern responses to such unfair business practices.
Established in July 2020, CPLB is Coupang’s subsidiary in charge of selling private brand items.
Questions & Answers
Q.What specific actions did Coupang take to manipulate its search algorithms?
What specific actions did Coupang take to manipulate its search algorithms?
Coupang used deceptive algorithms to give its private-label products greater exposure on its platform, prioritising at least 64,250 kinds of these items over those from other suppliers since February 2019.
Q.How did Coupang manipulate product reviews?
How did Coupang manipulate product reviews?
The company had 2297 employees write 72,614 positive reviews for 7342 kinds of its private brand items since 2019, to boost sales and product visibility.
Q.What was the impact of these practices on sales of Coupang's private-label products?
What was the impact of these practices on sales of Coupang's private-label products?
The prioritisation of these products led to their total sales soaring over 76 per cent during the period these practices were in place.
Q.What further action is being taken against Coupang beyond the fine?
What further action is being taken against Coupang beyond the fine?
The FTC referred Coupang and its subsidiary, Coupang Private Label Brands, to the prosecution for further investigation and ordered them to implement corrective measures.
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