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Hannah Bae (South Korea): Google and South Korea: Best Frenemies (Part 1)

To a casual observer, Google and South Korea appear to be the best of friends.

When Google CEO Eric Schmidt visited Seoul earlier this month, the media trumpeted every move he made - from his high-profile meeting with President Lee Myung-bak to even the smallest asides during his press conference at the Google Korea headquarters.

But look closer at Schmidt’s message for the country, as well as Google’s history of floundering in the local search market, and you’ll see they’re more “frenemies” than anything else.

Schmidt may have heaped praise on South Korea’s impressive IT infrastructure and locals’ love of mobile technologies, but he also had some pretty damning words for the government and its strict regulation of online activity.

“As I understand, Seoul was originally surrounded by a 20-foot-high wall,” he said, no doubt hearkening to the “walled garden” metaphor that has characterized the local Internet landscape.

“Regulations of the Internet in Korea are not state-of-the-art,” he said. “They are behind.”

While meeting with President Lee and Choi See-Joong, chairman of the Korea Communications Commission, the state-run media regulator, Schmidt must have been nice to their faces. But after the meetings, while speaking with local media, he didn’t mince words when asked about his message to those leaders: “Other countries have more liberal policies in some cases about the Internet, and they should examine them.”

It makes sense, as Google has been able to flourish by touting its openness.

Yet South Korea has hardly been smooth sailing for Google over the years. While it’s become part of the vernacular for those in the English-speaking world to say they’ve “googled” something, that’s not the case in South Korea.

Google’s market share here? Less than 5%.

Local portals, especially Naver, have Google solidly beat. In an infographic over at Search Engine Watch, Google doesn’t even get its own slice of the pie chart depicting the South Korean search market. It’s lumped into the 5% described simply as “etc.”

Simply put, Naver and No. 2 player Daum have made themselves indispensable to South Koreans for key online activity. As one blogger said: “Naver and Daum constructed ecosystems where Korean users can reside and perform functions more than simple searches.” Those same users, already devoted to platforms offered by Nate and Daum, simply see Google as spitting out search results, even if it does offer so much more.

Illustrating this point is a key tip for any new smartphone user in South Korea: Don’t ever try to get anywhere using the Google Maps app. Over here, Daum Maps is essential.

Part of the buzz surrounding Schmidt’s visit had to do with speculation that Google is preparing to take over Daum, which would instantly change the U.S. search giant’s fate in hyper-connected South Korea.

A local media outlet had quoted an unnamed source speaking on the matter, but Schmidt refused to comment on M&A rumors.

What Schmidt did offer, like a good frenemy, were reassurances that Google will continue to cooperate with South Korean firms and pump money into the country. That’s after Google touched off worries in its key partner Samsung with its purchase of Motorola Mobility and rejected South Korea as a site for a new data center.

So reassurances aside, what’s Google’s real message for South Korea? I bet it’s “watch your back.”

By Hannah Bae, an American journalist based in Seoul. A former intern at the John S. and James L. Knight Foundation, she is a tech enthusiast. You can follow her on Twitter at @hanbae.

Part 2 will examine Google's performance in China and Japan, as well as its pursuit of the Southeast Asian market.

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