Korea Fair Trade Commission Probes Coupang’s Algorithm Use

Coupang, based in South Korea, has been mired in allegations that it has messed with search algorithms to prioritize its own products over rivals’, Financial Times (FT) writes.

The Korea Fair Trade Commission (KFTC) was assigned to probe Coupang after public scrutiny for numerous other things — including the company’s criticized labor practices, several workers’ deaths at its warehouses and boycotts by consumers over the handling of a fire that killed one person.

The probe came as Coupang founder Bom Kim boosted the company’s plans for expansion after the $3.5 billion initial public offering in New York this past March.

The KFTC also imposed a $23 million fine on Coupang for the company’s Naver internet portal, which was found guilty of tampering with search algorithms for video and shopping platforms to put its own service ahead of others. In addition, Coupang has also faced criticism from civics groups for reportedly bullying vendors to offer products on its platform at the cheapest prices, and allegedly punishing those who didn’t meet those demands.

Coupang has reportedly propelled Japan-based SoftBank to new record highs with its U.S.-based initial public offering (IPO) last year, and its valuation hit $118.3 billion last year. But the company also saw some pressure from the fallout of disappointing first-quarter results, which showed a sharp revenue boost but widening losses anyway.

The report of the aforementioned disappointment happened last May, showing that the sales were up 74 percent from the previous year’s $4.2 billion performance.

However, the report also showed that the company had an adjusted loss of 68 cents per share. That was a massive increase over the 16-cent-loss analysis projected before the release.

The net loss came out to $474.6 million, the report says, and that was an improvement from the previous year’s number of $699 million.

And despite that, Coupang’s active user base grew 21 percent year over year.