Naver suffers falling search market share

Naver, the country’s largest internet company, is losing its share in the search engine market as users flock to more convenient artificial intelligence (AI) chatbot services such as OpenAI’s ChatGPT, Microsoft’s Bing and Google’s Bard, all of which are based on generative AI technology, according to industry officials, Tuesday.

The conversational AI chatbot services, which guide users as if they were talking to a human, are threatening Naver’s dominant position in the domestic search engine market, creating a crack in the company’s 20-year dominance, they said.

They also pointed out that as more users are searching not only through these AI-based search platforms but also through YouTube and other platforms that provide personalized services, Naver needs to offer search services that can read individual tastes.

According to the data from market tracker Internet Trend, Naver’s share in the domestic search engine market was at 51.49 percent as of May 28. This marks a drop of 13.32 percentage points since Dec. 31, 2022, when it was at 64.81 percent.

In second place behind Naver is Google. Amazingly, on Dec. 31, Google’s share was at only 26.8 percent, but the figure rose to 40.38 percent on May 28, increasing by 13.58 percentage points. The gap between Naver and Google was 38.01 percent on Dec. 31, but as of May 28, it was only 11.11 percent.

During the same period, thirdplace

Daum’s share increased from 3.49 percent to 4.45 percent, and fourth-place Microsoft Bing increased from 1.49 percent to 1.87 percent.

Experts see this shift as due to search engines adopting generative AI services. Google recently launched its generative AI service Bard and is building a new search engine that incorporates an AI chatbot service. Microsoft also adopted OpenAI’s ChatGPT to its search engine Microsoft Bing, which has worried Naver and Kakao, the mother company of Daum.

“The landscape of the search engine market is becoming more complex and competitive due to the

increasing availability of search on various platforms such as YouTube and Instagram as well as Google and Microsoft,” an official from a local IT company said on condition of anonymity.

The official also raised concerns that domestic tech firms may lose their ground to overseas tech giants due to the government’s view of domestic companies as regulatory targets. The U.S. has been stepping up pressure on Chinese companies by scrapping regulations to empower its own IT companies.

“The political debate is too focused on regulating domestic search service providers rather than supporting them,” the official said. “This could lead to a situation where the

domestic market would be dominated by foreign companies.”

To retain its competitiveness, Naver plans to unveil its hyperscale AI language model HyperCLOVA X this summer and introduce SearchGPT, a new search service that combines HyperCLOVA X with its search engine, within this year.

The company also said it will gradually overhaul its search design and service such as search user interface and user experience to create an ultra-personalized search experience using AI technology.

Regarding the falling market share in the domestic search engine market, a Naver spokesperson declined to comment.