Coupang investigated by FTC over accusations of meddling with algorithms

South Korea’s antitrust watchdog has launched a probe into e-commerce giant Coupang over the accusation that the company has meddled with algorithms to prioritize its own products, according to multiple reports on Sunday.

According to the reports, the Korea Fair Trade Commission conducted an on-the-spot inspection at Coupang’s headquarters office in Seoul late last month following accusations that it had violated the Fair Trade Act.

One of the accusations claims that Coupang had meddled with search algorithms on its platform to make its private label products appear at the top of the page while other companies’ products were pushed to the bottom and received less exposure.

The company has also been accused of demanding that suppliers offer the cheapest prices possible and threatening with disadvantages if they fail to follow through.

The anti-trust watchdog is also looking into whether Coupang had coerced suppliers into purchasing advertisements and excluded them from its subscription-based delivery service as an act of retaliation, the reports said.

In a similar case, Naver was fined 26.7 billion won ($23 million) last year for manipulating search algorithms on its video and shopping platforms to place its own content and products on the top of search results.

Following the decision, Song Sang-min, director general at the KFTC, said the web portal giant “deceived consumers and distorted competition” by tweaking search results, though Naver denied the accusation and said the move was to diversify content.

The move comes as the company has faced mounting criticism over its treatment of delivery workers in recent months.

Last month, a group of people staged a protest outside the company’s headquarters over the death of the owner of a restaurant listed on its food delivery app, Coupang Eats.

The owner suffered a stroke and later died after dealing with a Coupang Eats customer, prompting criticisms that the company had fallen short on protecting restaurant owners.

A fire also broke out at one of its distribution centers last month, lasting days and leaving one firefighter dead. While the investigation into the cause is still ongoing, reports of faulty sprinklers and fire shutters added to the criticism.

By Yim Hyun-su (hyunsu@heraldcorp.com)