Tackling Korean Market
Global IT giants like Google and Facebook, which already dominate major Internet markets around the world, are accelerating the launch of new offensives to dominate the Korean market too.
With Chinese Internet companies like Alibaba and Tencent joining the trend, there are increasing concerns that the Korean Internet market might be dominated by foreign enterprises.
In fact, local Internet companies are reversely discriminated against by the government, far from getting support to sharpen their competitiveness. Therefore, many in the industry are saying that it is urgent to establish protective measures.
According to industry sources on Dec. 14, Google started an e-book rental service for the first time in Korea in the second week of this month. The fact that the search engine giant chose Korea rather than the U.S. or European countries is getting a lot of attention in the industry.
Google also recently launched Google Play Newsstand for Android, an app that combines Google Play Magazines and Google Play Music by recruiting former employees of Melon, the largest digital music download site in the nation.
Facebook joined the competition to dominate the Korean mobile ad market as well. Following CEO Mark Zuckerberg's visit to Korea in October, major executives of the Asia-Pacific area are also scheduled to visit the nation in the third week of December and hold a briefing on mobile ad strategies involving local media outlets.
On top of that, Chinese companies with enormous financial firepower such as Alibaba and Tencent also introduced various types of content and mobile payment services to the Korean market, heralding fierce competition between local and foreign companies from next year.
So far, the local Internet market has been like an impregnable fortress to foreign companies. In particular, Google has been powerless in the local search market. According to market research firm StatCounter, the Web search giant took 91.74 percent of the European market as of November. However, Korean firms constituted 90 percent of the local market, maintaining market dominance.
Nonetheless, market conditions are changing in tandem with a changing environment toward a mobile platform. Naver is unable to find growth momentum in mobile services other than its search engine business. Daum Kakao is also unsuccessful in creating a great sensation after messaging app KakaoTalk.
The government's reverse discrimination against Internet companies, such as cyber censorship, the application of the Juvenile Protection Act, and mandatory game shutdown is causing a sense of crisis for local companies.
As YouTube dominated the local video service market after the implementation of the Internet real-name system, foreign business operators are zeroing in on different kinds of regulations applicable to local companies.
Choi Jae-hong, professor at Kangwon National University, said, “As not only U.S. companies like Google or Facebook but also Chinese firms with serious financial firepower are entering the Korean market, unimaginably fierce competition is expected.” He added, “Since foreign companies are rapidly penetrating the local market, it is necessary for the government to ease regulations or provide support soon.”