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Coupang hit with $102 million fine over search engine manipulation
2024-06-17
Coupang was slapped with a 140 billion won ($102 million) fine by the Fair Trade Commission (FTC) for allegedly manipulating search engine results to enhance the visibility of its own brands over competing products.
 
The FTC decided to file a complaint against the New York-listed e-commerce giant and its subsidiary Coupang Private Label Brands (CPLB) to prosecutors as well, the fair trade watchdog said Thursday in a release.
 
Coupang strongly refuted the allegations, saying that it would take legal action against “the excessive penalty” and “an unfair decision” by the FTC to refer the case for prosecution.  

CPLB, a wholly-owned subsidiary of Coupang, handles the online marketplace operator’s private-brand products, which refers to products manufactured and marketed by Coupang against other external brands sold on the Coupang platform.  
 
“Coupang and CPLB manipulated the algorithm behind its search ranking and had their employees give favorable product reviews and ratings in order to enhance sales of their private-brand products, conducting deceitful activities by presenting their private-brand products on the top of search results over more than 400 million products from 210,000 sellers on Coupang’s online marketplace,” said the FTC.  
 
Among the products that appeared on the top of search results were also those with low sales performance and items from sellers that promised to pay rebate fees to Coupang, according to the regulator.
 
“By such an act, consumers were misled into believing that Coupang’s products are better than those from other sellers on Coupang and purchasing Coupang’s private-brand products.”
 
As Coupang, the largest online marketplace operator in Korea, serves as both a platform operator and a seller on its own platform, the FTC suggested that such dual statuses may result in a conflict of interest.  
 
Coupang, on the other hand, promptly refuted the allegations.
 
The FTC's decision to “claim that [Coupang’s service] is deceptive is outdated and hinders innovation, ignoring well-informed consumers’ choices in the digital era,” said Coupang in a statement issued Thursday.
 
“We are disappointed by the FTC’s unfair decision to impose an overly harsh penalty that exceeds half of the total amount of fines imposed on the 500 largest companies in Korea last year and to even refer the case to prosecution, and will file for an administrative litigation against the FTC to defend against the injustice.”  
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