Strategies for building information and communications infrastructure

Korea started making policies on information and the communication industry in the 1980s. The military regime, which came to power through a coup in 1979–1980, faced recessions, both in Korea and worldwide. In 1979, the Korean economy recorded negative growth for the first time, and investments in both facilities and industrial production plummeted while inflation and foreign debt soared. The military regime chose the information and communications industry, which emerged as a promising industry in various advanced countries including the U.S., as a new industry on which to focus and invest resources. In 1980–1981, the military regime made a long-term plan which focused on strengthening Korea's electronic switching and semiconductor industry. Korea succeeded in developing its own technology in these two fields, which later became the basis for Internet line construction (Chosun Biz 07. 01. 2014).

Economic project in the military regime was embodied as the innovation of information and communication technology and the construction of information infrastructure. This led to a series of developments: wireless communications in 1982 and personal computer (PC) communicationsFootnote ³ in 1984. The public switched telephone network (PSTN) was completed nationwide in 1987 which was the result of a project led by a state-owned corporation in the early 1980s.Footnote ⁴ The PSTN gave Korea one of the most advanced digitally switched networks in the world at that time. In 1987, the government started investing in building national communications networks and upgrading qualities while implementing the National Basic Information System project. In the wake of the 1988 Seoul Olympics, the government worked with chaebols to increase networks and advance the communication environment. In addition, the government launched information and cultural campaigns, pushing for sales of PCs around the nation and making computer training a part of their compulsory education (National Computerization Agency (NCA) 2002).

The government's focus on building information and communications infrastructure for competitiveness and growth continued into the 1990s. In 1994, the government presented globalization as a new national strategy. This was also to keep pace with chaebols, which had started changing their accumulation strategies in the late 1980s. Confronted by collective resistance from the workforce and intensifying business competition, chaebols promoted labor market flexibility, expanded the scope of capital accumulation globally, and entered the finance and distribution sectors (Kim Reference Kim2018). Emphasizing competitiveness and productivity, the government argued that the Korean economy was in crisis and overcoming this would require winning the world competition through bold globalization (Globalization Committee 1998, pp. 255–57). It presented liberalization and deregulation in various sectors and labor market flexibility as solutions for Korea in fierce global competition. The government tried to further advance measures to promote the information and communication industry, challenged by U.S. and Japanese national initiatives to support information and communications in the 1990s (FKI 2011, pp. 499–505; NCA 2002). To effectively implement policies, the government reorganized offices and laws while investing intensively in building a high-speed information and communication network by designating it a national strategic project for the twenty first century (NCA 1996, p. 28).

The government and corporate efforts to build information and communication infrastructure paid off quickly (NCA 1999, pp. 443–47, 2002). First, as PCs quickly spread in large cities, the penetration rate of PCs for households grew from 11% in 1990 to 20.7% in 1994 and then 44% (8 million units) in 1998. Second, in line with the spread of PCs, PC communications has also spread around teenagers and those in their twenties in large cities. The number of paid subscribers for PC communications was about 100,000 in 1993 and the percentage of users was 3.3% of the population in 1994. By 1997, the number of paid subscribers exceeded 3 million and the percentage of users had reached 13.7.

Third, Internet users also grew rapidly. From about 138,000 in 1994, the number of users more than doubled every year, reaching 1,634,000 in 1997 and then 3,103,000 by the end of 1998. The first broadband service, which was cable modem service provided by Korea Thrunet, started in 1997. It was the start of Korea's nationwide broadband (cable modem and Digital Subscriber Line) networks. And after a few years, Korea became the most developed country in terms of broadband penetration and coverage rate among OECD countries (An Reference An2002, p. 422; OECD 2001). The government subsidized investment in the broadband information and communication network business, lowering Internet fees, and the competition for broadband Internet networks between telecommunication companies intensified.

The intensive investment of public and private resources through concerted efforts by the government and chaebols to create new growth industries and profits led to the speedy establishment of information and communication infrastructure. However, the outcome was also indebted to the unique circumstances of Korea. Half the Korean population lives in the Seoul metropolitan area, and Seoul was one of the world's most densely populated cities in the 1990s. Moreover, since the mid-1990s, the majority of housing in Seoul has been apartments with a high density of residents (The Seoul Institute 2003, pp. 15, 65). In Seoul, “more than eighty percent of new apartment buildings were designed with built in fibre conduits, in preparation for what Koreans regarded as a future lifestyle: Fibre-To-The-Home.” And “the fact that Korea's dense, urban population was mainly housed in Multi-Dwelling Units made the country ripe for high broadband penetration, because network installations were relatively easier and cheaper due to the increased economies of scale” (An Reference An2002, pp. 419–20). In other words, Korean society provided an environment where infrastructure building achieved faster outcomes than in other countries.

1997 Economic crisis and fostering IT venture businesses as a solution

In 1997, the Korean economy faced a crisis: the real economic growth rate dropped below −5% and the gross domestic investment rate and the import and export rates decreased. Several chaebols went bankrupt, and the state had to seek a bailout from the IMF due to their inability to pay off their debts. Chaebols proposed an expansion of exports as a solution by launching a USD 50 billion surplus campaign (FKI 2011, pp. 592–629). While attempting to increase exports, the government announced its plan to promote the information and communications industry, which was regarded as a low-cost, high-efficiency, high-value-added industry and a strategic solution to overcome the economic crisis (NCA 2005, p. 81). Although the plan was largely similar to previous plans, the level of intensity in government investment increased and the government included IT venture businesses as a focus in their plan, noting the U.S. New Economy and Silicon Valley models. President Kim Dae-jung spoke of his vision of creating jobs and drastic economic development through venture businesses at his inauguration and emphasized the importance of competitiveness in the knowledge and information industry in his New Year's address (Office of President 1999, 2000).

The promotion of IT venture businesses was in line with the government's chaebol reform stance. Kim Dae-jung, who had long criticized the military regime as leader of the opposition, argued that the cause of the economic crisis was chaebols' lack of transparency in governance, corruption, and debt-financing practices, which gained wide support (Kim 2019, pp. 30–31). As the economic crisis severely damaged the legitimacy of chaebols, the government tried to intensively foster IT ventures, American-style small- and medium-sized businesses that symbolized low-cost and high-efficiency business (Small and Medium Business Administration (SMBA) 1998). Specifically, the government revised the Act on Special Measures for the Promotion of Venture Businesses and established venture business selection criteria. The selection criteria for intensively supporting venture businesses were the size of venture capital investment, the proportion of R&D expenditure, the incorporation of new technologies, and accreditation by venture company evaluation agencies. The government also encouraged college students, professors, and researchers to start ventures using promotional materials and implemented policies on stock options, deregulating entrepreneurship, and building support systems, tax exemptions and reductions for businesses, and technology development and space use in business establishments (SMBA 2000, 2003). In some ways, the government was directly involved in raising venture businesses through its policies; venture companies were no different from other new businesses except they had “venture” in their names.

The government helped venture businesses' financing in several ways. First, the government invested in venture investment associations to invest in venture businesses related to the core industries chosen by each government ministry. The government tried to utilize the function of venture capital to connect venture companies with investors and invested money to share risks with other investors to help develop the venture capital market. In 2001, the government's investments exceeded USD 200 million, and the government's share of the total venture capital market was 30% (KISDI 2002, p. 38). Second, in 1998, the government started loaning venture capital to venture-certified companies at interest rates of ⩾2%, which was lower than those for other companies. The government provided support for about 8,000 venture businesses by raising about USD 1.67 billion in total over the 5-year period since 1998, including about USD 670 million in 1999 and USD 185 million in 2000. To promote venture investment, the government signed agreements with investment companies and financial institutions and ran a guarantee program for venture investment, guaranteeing a total of USD 34.2 billion in 2001 (Jang Reference Jang2005, p. 33; KISDI 2002, pp. 38–39).

Third, the government promoted the Korean Securities Dealers Automated Quotations (KOSDAQ), a direct financial market that was established in 1996 to help small- and medium-sized venture companies with financing by allowing them to trade stocks that could not be listed on the stock exchange. However, due to its little recognition and high risk, the volume of transactions was insignificant. The government implemented measures such as easing the requirements for listing on KOSDAQ to help bring in funds; in fact, transactions have increased significantly since 1999 (SMBA 2003). Fourth, the government started allowing chaebols to invest in venture businesses in 1999, provided that they complied with the following conditions: <30% shares and not the largest shareholder. For profit and informatization, chaebols joined the venture capital market by establishing a startup investment company and an affiliated venture company and acquiring stocks. As a result, the supply of venture capital grew rapidly although estimating the exact rate is difficult (Song Reference Song, Jeon and Kim2004, pp. 259–62).

The government also put extra effort into developing information and communication infrastructure. Announcing Cyber Korea 21 and e-Korea Vision 2006 in 1999 and 2002, respectively, the government created jobs and new growth engines through advances in digitalization. The government and corporations expedited the expansion of the wired and wireless Internet infrastructure and promoted e-commerce, while developing the Information Education Plan for 10 Million People, enabling many to engage in online activities (NCA 2002, 2005). As the penetration of PCs grew sharply with the government's One PC per Person policy, PC users exceeded 20 million by 2000, when about 33 million people in Korea were 15–64 years old. The proportion of Internet users also increased rapidly. In 1998, thanks to investments from both the government and corporations, high-speed Internet services became available and wireless Internet services began in 1999. In 2001, the number of wireless Internet users exceeded 20 million and Korea became the country with the highest level of high-speed Internet infrastructure among OECD countries in 2001. With 92.7% of households having Internet access in 2005, the penetration of the Internet was practically absolute. Meanwhile, PC communications started declining rapidly as the Internet's popularity surged and by 2001, more PC communications service companies had stopped their service (Korean Statistical Information Service (KISA) 2017; NCA 2002, 2005). As a result of infrastructure building by the government and corporations for over 10 years, many people were able to use online platforms by the late 1990s.

Venture boom and corruption scandals

The government's funding support and infrastructure building created a venture boom. The number of venture businesses grew from 2,042 in 1998 to 11,392 in 2001 and average sales surged from about USD 3.95 million to USD 11 million, of which about 30% were IT companies. The number of companies listed on the KOSDAQ increased from 331 in 1998 to 589 in 2000 and their market capitalization increased from about USD 660 million in 1998 to USD 8.3 billion in 1999 (KISDI 2002, pp. 17–18, 22). Internet platform companies have also emerged. Currently, Korea's leading platform company, Naver is a venture company created by chaebol affiliates during this period. In 2001, the size of Korea's Internet industry had grown to about USD 65 billion, which was an 8.2% increase compared to the previous year and 14.2% of Korea's GDP (KISA 2003, p. 232). However, the venture boom soon underwent a correction period. With the collapse of the Nasdaq market bubble in 2000, the market capitalization of the KOSDAQ plummeted from about USD 8.3 billion to USD 2.45 billion in that year and the growth of the listed companies also slowed. The number of venture companies had also dropped from 11,392 to 7702 by 2003 and the investment volume of government and private venture capital in 2001 fell below 1999 levels (KISDI 2002, pp. 17–18, 22; SMBA 2003).

The government strategy was focused on overcoming the crisis through economic growth and helping new companies to accumulate capital. This resulted in a rapid input of resources around 1997. As a result, the Internet and venture businesses came to be regarded as investment vehicles that would facilitate the creation of wealth for people, and investors sometimes overlooked the risk of venture investment due to their faith in the government and venture companies (Lee Reference Lee2000, p. 15; Wi Reference Wi2006). At the same time, the issue of over-investing and duplication of investments was raised. While the government made intensive investments in venture business over a short period of time during the economic crisis, the competition between ministries led to excessive and redundant government investments (Song Reference Song, Jeon and Kim2005, p. 279).

The synchronicity between the U.S. and Korean stock markets affected the correction of the venture boom, and the problem of the lack of a profit model for platform companies emerged in Korea, similar to the U.S. With limited information from investors, venture companies showed great interest in expanding their businesses and creating financial profits using stock prices. Ultimately, the venture boom created a fever of “get-rich-quick,” and the media was keen to introduce stories of those who made big fortunes at a stroke. Skepticism resulting from relative deprivation increased for those living on labor alone, thereby shattering the existing social norms. During this process, many people experienced failure in investment (Lee Reference Lee2000, p. 18; Sisajournal 03.09.2000).

In addition to bubbles and the issue of over-investing and duplication, the government's short-term large-scale funding strategy created an environment that could cause corruption, and various venture corruption scandals were revealed one after another. As the discretionary power of the officials who had the authority to allocate resources increased, companies tried to access bureaucrats or politicians and prioritized KOSDAQ listing, capital increase, and accounting gimmicks over business performance or technical innovation (Song Reference Song, Jeon and Kim2005, p. 293). As a result, financial losses were borne by ordinary investors, and social loss was enlarged. Faced with venture bubbles and corruption scandals, the government admitted to the problems of the existing method and strengthened venture companies' management and supervision. For example, the government introduced innovation capability evaluation standards to certify venture companies and strengthened the requirements for KOSDAQ listing/delisting by emphasizing ethical management while the Fair Trade Commission investigated unfair insider trading (Lee, Lim and Chung Reference Lee, Lim and Chung2002, pp. 216–18). As the market underwent a process of adjustment from the early 2000s onward, only companies providing content and services favorable to people have survived and some companies such as Kakao and Naver have evolved into large platform companies through Merger and Acquisition (M&A).

Korea's platform economy was created and developed as a result of the government's strategy for economic growth as well as overcoming the crisis. The Korean government worked with corporations for over a decade to build the infrastructure for the platform economy by investing public resources and helping platform businesses with financing by making intensive investments for 1–2 years, presenting them with a breakthrough opportunity for the economic crisis. Although the strategy was crucial in the formation and development of the platform economy, it also caused problems, such as financial bubbles, excessive duplication of investments, and corruption scandals.

Sufficient Internet users; insufficient content and services

Online platform businesses emerged as the government presented IT ventures as a solution to the economic crisis, aided in their financing by investing various resources, and built an environment for widespread Internet use. In fact, the first search engine in Korea was released in 1995, and Kakao, one of the leading Korean platform companies, was also founded at that time. However, in the 1997 financial crisis, Yahoo, a global search engine, started its business in Korea along with the creation of several venture businesses, thus creating an online platform ecosystem in Korea. As IT venture became a buzzword, and the Internet infrastructure began to be built, platform companies emerged. Kakao, a venture company that initially operated a website on the arts, grew rapidly after starting a free webmail service in 1997. In 1999, Kakao was reorganized into a web portal by changing its brand name. Kakao was registered on the KOSDAQ in November 1999, which was highly utilized based on the governmental policy of the time; thus, the absence of a profit model was resolved (Hong Reference Hong2001, pp. 22–24; Jung, Park and Han Reference Jung, Park and Han2004, p. 101). In 1999, Lycos, another global search engine, also jumped into the Korean market, and Naver launched a portal service in Korea. Naver received investment from venture capital and a venture company and was able to raise funds smoothly by listing on the KOSDAQ in 2002 (Yoon and Im Reference Yoon and Im2008, pp. 96–97).

However, Korean platform companies and Internet users faced a critical problem: the lack of Korean websites and web documents. Since most Koreans had a clear preference for Korean-language content, this was a very important issue. With the launch of high-speed Internet services, the number of users exploded to >10 million in 1999 but the services they could get online were extremely limited and they could not access the information they wanted. There were only 8,045 .kr domains in December 1997, increasing to 26,166 in December 1998, which remained extremely insufficient for the demand (NCA 1999). This shortage was a predictable outcome, considering how informatization and online networks were developed in Korea. They were carried out top-down via government–corporate initiatives, primarily through infrastructure building for economic growth and then in response to the economic crisis for a short period of time rather than in gradual progress from the bottom-up. While the top-down approach led to the speedy establishment of online networking infrastructure and the creation of venture businesses through intensive resource allocation, it did not offer much to cyberspace users. For the platform economy to fully work out, companies had to create innovative services and content, which are other essential elements of the platform economy.

Corporate strategy to imitate PC communications business

Korean platform companies were able to address the problems of the lack of services and content by imitating the services and user activities of PC communications service companies that were thriving in the late 1990s. In Korea, PC communications services typically provided videotex and a bulletin board system through the telephone network. PC communications grew largely among teenagers and those in their twenties in large cities, with the number of paid subscribers exceeding 100,000 in 1993; this number exceeded 3 million in 1997, representing 13.7% of the population (NCA 2002). It was around 1999 that most of the online users moved to Internet service using the commercial broadband networks (Lee Reference Lee2016, p. 219). When online platform companies appeared in the late 1990s, they competed for users against big corporations that provided PC communications services for a short while, including Korea Telecom and affiliates of Samsung and SK Group. In the face of this competition, Kakao and Naver tried to bring the services provided by PC communications service companies and PC communications user activities to the Internet and advance them using superior technology. They also tried to solve their problem of lacking services and content through this strategy.

What drew many Koreans to PC communications was bulletin board-based online communities and chat rooms, where people with similar interests could communicate and share information. In fact, all the services provided by PC communications service companies were bulletin boards, chat rooms, and resources, if not more. However, young people, thirsting for new ways to communicate and build relationships, turned cyberspace into a diverse and dynamic placeFootnote ⁵ (Lee Reference Lee2016, p. 221). Bulletin boards were created for a wide variety of topics and users exchanged and distributed information and materials.Footnote ⁶ Naturally, transactions between users started appearing along with games, literature, music, language, and political activities in new and experimental forms and approaches. We can observe the birth of new digital subcultures such as amateur hackers, young software program developers, private bulletin board system operators, and online community dwellers at this time (Lee Reference Lee2016, p. 221). There were just 247 online communities in 1993 but this number increased every year to 1,000 in 1996 and then 18,700 in 2000 (Yoon Reference Yoon2011, p. 81). PC communications service companies extracted the activities of these users and took in subscribers who paid monthly fees while selling paid content, a primitive form of the current online platform company's monetization.

By providing a “community” service similar to that of PC communications, companies are growing rapidly, and are influencing relationship building and communication among people. In 1997, Kakao adapted the paid e-mail service of PC communications business to the web, proposing a lifetime free service to users. While drawing users in by starting a “café” service, an online community service, in 1999; Naver did the same soon after. As e-mail, cafés, and chatroom services facilitated online communication and users could create new online communities, people flocked to the Internet, and online businesses that provided such online community services also increased. Online platforms which provided a service through which users could find old or current schoolmates and that helped them with activities in online communities, also gained great popularity (Digital Trend News 07. 17. 2010). According to a 2003 survey, 62% of online users had joined more than six online communities and 94% had joined more than one online community (KISA 2005, p. 109). Rather than focusing on the development and efficiency of search engines like American IT businesses, Korean online platform companies strove to make it easier for users to open and use online communities (Yoon Reference Yoon2011, pp. 85–87). The success of the business hinged on helping users communicate and engage in community activities with more novel ideas. While Yahoo and Lycos were significantly ahead of the search engine competition at the time, Korean companies such as Naver jumped into the search engine business after building a sufficiently large database.

The emergence of online platforms has also begun to affect the media market in Korea. PC communications service companies provided users with a place to build relationships and have two-way communication while offering news services and various types of information to gather more subscribers. In the PC communications networks, users could read news articles and get weather and stock information, exchange rates, real estate, and other basic information. Portal platforms such as Kakao and Naver also provided users with news published by media outlets and other information in various fields for free. As news gathered on portals, the media market underwent a unique and important change from the early 2000s. The main mode of Korean news consumption shifted from paper-based newspapers to portal-based outlets. Furthermore, as the influence of Kakao and Naver increased, the influence of paper-based newspapers and media companies' websites declined (Park Reference Park2018, p. 159).

News was consumed article by article on portals, and the values and norms of the media companies became irrelevant. Because loyalty to the media companies is not engendered by individual articles, these companies paid less attention to building trust (Park Reference Park2018, pp. 160–61; Van Dijck, Poell and De Waal Reference Van Dijck, Poell and de Waal2018, pp. 51–52). The news rapidly changed to be more suitable for the portals. Because the media companies' revenue depends on the number of clicks on these portals, the so-called “click war” broke out. This accelerated sensationalism, fragmentation of the news (Kim Reference Kim2020, p. 67; Nam and Park Reference Nam and Park2013). To increase the number of clicks, the number of articles increased rapidly. Furthermore, fact-checking and determination of an article's value were overlooked. This led to increased frequency of news production by reporters, whereas desking time was shortened (Kim Reference Kim2020, p. 67).

To increase the traffic of visitors, Naver and Kakao provided free webcomics, further imitating PC communications businesses. Since 2000, these webcomics have been called “webtoons,” and have since evolved into South Korea's unique platform culture (Cho Reference Cho2021; Kim and Yu Reference Kim and Yu2019; Park Reference Park2014, pp. 146–47) and have become important content for portals since 2003. The increase in the popularity of webtoons in Korea is due in part to the successful adaptation of comics styles to the digital environment, which features a vertical layout optimized for computers, experimentation with color and space (Cho Reference Cho2021, p. 73; Kim and Yu Reference Kim and Yu2019, p. 3). And webtoons have been developed by utilizing various potentials that the digital platform offers, such as open solicitation, free web distribution, active communication between readers and producers through comment and recommendation systems (Cho Reference Cho2021, p. 74). Since the mid-2000s, webtoons have developed further thanks to their great popularity in South Korea; thus, Naver and Kakao have extended webtoon services in the global market since 2014. Moreover, during this process, webtoons were commercialized to be more suitable for the platform (Cho Reference Cho2021; Han Reference Han2015, pp. 138–39; Kim and Yu Reference Kim and Yu2019; Park Reference Park2014, pp. 159–60). In addition, Kakao and Naver have helped e-commerce thrive since 2000 and have also sold movies, videos, music, games, and avatars (KISA 2003, p. 237).

The Korean portals were different from the usual Internet portals that are supposed to serve as just a gateway to access the Internet and navigate to other sites. Kakao and Naver provided e-mail, online community services, news, webtoons, and other content to prevent users from moving to other sites. They aggressively tried to increase their number of subscribers and visitors, the time users remained on their site, and their page views; through this, they tried to attract investments and advertisers, manage stock prices, and earn other profits. Eventually, the online platform companies either took the form of portals or were affected by portals, which made the competition more intense. In the process, Freechal and Kakao that hastily turned their free online community or e-mail services into paid services fell from grace quickly.

Rapid growth and monopoly of web portals

Web portal companies grew rapidly, leading the growth of the platform economy, and took an important position in the Korean economy. Since 2000, they have steadily expanded their business areas to include listing advertisements, e-commerce, and selling content. Mergers and acquisitions of leading web portal companies were carried out to take content from each other and combine networks, which continued until the mid-2000s. Even amid the KOSDAQ bubble and venture business corruption scandals, they showed record-high sales and the sales of the four major web portals rose from about USD 47 million in 2000 to >15 times that in the mid-2000s (KISA 2003, pp. 237–38; NCA 2005). The prime examples are Kakao and Naver, the leading Korean platform companies both then and now. Kakao's sales grew very rapidly in 1999, reaching seven times that of 1997 (Hong Reference Hong2001, p. 22). Its listing on the KOSDAQ in 1999 resolved the problem of the no-profit model to some extent. As Kakao focused on shopping mall business and online content sales in response to its advertising service, which had slowed down since 2000, the company began to make profits in 2001. In 2002, it was the first online company to surpass about USD 160 million in sales. In 2003, it had >30 million subscribers and 500 million page views per day. Its operating profit was about USD 12.5 million in 2002, and about USD 29.0–31.5 million in 2003–2005 (KISA 2003, p. 237; Korea Database Promotion Center (KDPC) 2006, pp. 20–25).

Naver, which entered the market in 1999, merged with an online game company in April 2000 to make profits in the game and e-commerce sectors. In 2001, more than half of its sales came from the game business. They launched a paid listing service for the first time in the industry in 2001, which later became a cash cow, accounting for 53% of its 2007 sales. In 2002, Naver launched Knowledge iN service, which resolved the problem of a lack of content through users' collective intelligence. In a situation where Korean texts were insufficient in cyberspace, this is what interested people (Jin Reference Jin2017, p. 214). In 2003, Naver started blog and online community services to increase the number of users and their “dwell time.” The number of subscribers to Naver has soared since 2000, exceeding 26 million by 2004; they continued to dominate the search engine market as they started charging for paid listings per user click. Naver's sales surged from about USD 62 million in 2002 to about USD 300 million in 2005 and its operating profits also increased from about USD 25 million in 2001 to about USD 110 million in 2005 (KDPC 2006, pp. 15–20; KISA 2003, p. 308; Park, Lee and Ha Reference Park, Lee and Song2007, pp. 107–13; Yoon and Im Reference Yoon and Im2008).

Two locally based portals, Kakao and Naver, “have advanced their unique functions to compete against US-based search engines, and this means that companies like Google and Yahoo have not penetrated the Korean market to the same extent as markets in other countries” (Jin Reference Jin2017, p. 214). Only a few countries, including Korea, have been able to develop their own search engines and compete with global counterparts (Jin Reference Jin2017, p. 216). However, except for Naver's great success in Japan with its online messenger LINE since 2011, their businesses have failed in the global market. The influence of global platforms has grown in Korea over time. In summary, portals rapidly imitated and innovated the business model of PC communications, familiar to Koreans in the early days. These have only been successful in Korea based on language and cultural intimacy.

The sharp growth of web portals introduced monopolies. Naver and Kakao became the standard for the Korean Internet and platform business in the early days and they absorbed all information through the network effect. Sites and platforms outside of web portals gradually served as content or service providers for web portals, increasing the influence of web portals.

This came with centralization in the web portal business. In 2003, the number of visitors to Kakao was well over 20 million, and the numbers for Naver and Yahoo were slightly less than 20 million, with the next in line having >5 million fewer visitors. In terms of the number of visits and dwell time, four companies were in a league of their own. By 2006, three Korean web portals – Naver, Kakao, and Nate – had 55% of all visitors to web portals. In 2002–2003, 72–76% of total portal sales were generated by Kakao and Naver. In 2005 and 2006, Naver made 40.9 and 44.8% of total sales, respectively, showing a clear upturn (KDPC 2006, pp. 3, 14; KISA 2004, pp. 105–06).

Naver and Kakao have become the de facto rulers of the online world. Most Koreans engaging in online activities during this period used these portals. It has become difficult to consider online activities without Naver and Kakao, including relationships, business, consumption, leisure, and cultural life. Moreover, they obtained the power to control the media market and change the cultural products. In addition, they have become key actors who can control the media market and change the cultural product market. In just 3 or 4 years, two companies have enjoyed great power in the economy, politics, and civil society.