Coupang, the largest e-commerce platform in South Korea, was fined 140 billion won for manipulating search rankings and falsifying evaluations

On June 16, IT House reported that the Korea Fair Trade Commission recently fined Coupang, the largest e-commerce platform in South Korea, and one of its subsidiaries a total of 140 billion won (currently about 736 million yuan), setting the highest fine for circulation enterprises in South Korea's history. The Korean Fair Trade Commission punished Kupeng mainly for two reasons: first, manipulating the shopping search rankings, and second, the product shopping evaluation may also be forged by Kupeng.

The Korean Fair Trade Commission also issued a correction order against this allegation, saying that Coupang and its subsidiary CPLB in charge of private brand management would be transferred to the prosecution for further investigation.

Coupang promptly filed a lawsuit against the punishment, saying that the decision violated the trend of digitalization and the spirit of innovation. The company argued that, globally, it is unprecedented to suffer such a huge fine (the amount of the fine is equivalent to more than half of the cumulative fine imposed on the top 500 enterprises in South Korea in 2023) just because of the problem of commodity display.

The Korea Fair Trade Commission accused Coupang of manipulating the search algorithm and adjusting the search rankings to keep at least 64250 private brands and direct sales goods at the top of the search results from February 2019 to July 2023.

The Korea Fair Trade Commission added that because search rankings have a significant impact on consumer purchase decisions, Coupang's behavior is suspected of obstructing fair competition, limiting consumers' rational choice, and distorting resource allocation.

"Coupang is both a sales platform and a seller of its own goods. This dual identity may lead to conflicts of interest," the Korea Fair Trade Commission said in a statement.

By the end of 2022, the sales of Coupang's own brands and direct sales accounted for about 70% of its total sales, up from about 60% by the end of 2019. At the same time, there are about 210000 merchants selling branded goods on the Coupang platform.

Coupang is listed on the New York Stock Exchange and has about one-third of the domestic e-commerce market in South Korea. As of May this year, its monthly active users were about 31.11 million.

Korean government agencies also found that Coupang employees wrote good reviews and gave high scores for their own brands and directly purchased goods from February 2019 to July 2023.

The Korea Fair Trade Commission said that a total of 2297 executives and employees of Coupang wrote 72614 comments for at least 7342 products on the platform. During this period, the sales of goods that were highly praised and scored by Coupang employees increased, while the sales of other goods declined.

Due to the decision of the antitrust investigation, Coupang canceled the foundation laying ceremony of the new logistics center in Busan, the second largest city in South Korea, which was scheduled to be held on June 20. This project is part of the 3 trillion won logistics investment plan announced by Coupang in March this year, aiming to expand its nationwide "rocket distribution" service.