Earlier, it was discovered that SM Entertainment had hired viral marketing firms and instructed them to generate positive public perception while dealing with the management conflict with HYBE in February-March of the previous year. This task was carried out by top-level SM executives.
On July 24, it was also discovered that SM had considered enlisting the help of YouTube content creators in this scheme, as prosecutors looked into a case involving the dissemination of fake news and scrutinized the potential links between entertainment companies and YouTube content creators.
According to legal experts, SM’s possible efforts to control public perception may constitute unlawful behavior.
Following HYBE’s withdrawal of its acquisition offer and the resolution of the management conflict in March, Jang Jae-ho was promoted to the position of Chief Strategy Officer (CSO) at SM. This was seen as a recognition of his involvement in manipulating public perception. Similarly, another employee, known as Director Choi, who was also involved in these actions, was promoted and continues to work for a subsidiary of SM.
Choi, who had previously established another entertainment agency in 2020, recently saw his company being acquired by SM’s subsidiary. This sparked concerns of potential conflicts of interest and the potential misuse of company funds to compensate those involved in manipulating public opinion. However, SM maintained that the acquisition was a strategic business move and not a form of reward.
In late 2023, Jang Jae-ho stepped down from his position while under investigation by the Financial Supervisory Service (FSS) for accusations of manipulating stock prices with regards to SM and Kakao. His close ties to Astrafe, which was also connected to entities that supported the alliance between SM and Kakao against HYBE, were also brought to light during the investigation.
Recruitment of YouTubers
By the end of February 2023, SM’s public opinion campaign had progressed to involve the enlistment of YouTubers. An employee from a viral marketing agency informed Park, “The preparations are done. We have reached out to YouTube creators and will discuss Instagram accounts tomorrow.”
Upon inquiry, SM disclosed that they had indeed been offered the opportunity to recruit YouTube creators, but declined due to a lack of alignment with their online marketing strategy. However, recent investigations into the dissemination of false information have uncovered proof of monetary exchanges between entertainment companies and YouTube creators.
Understanding the Legal Implications of Business Interference and Potential Charges
According to legal experts, SM’s manipulation of public opinion may qualify as interference in business. This could include activities such as spreading false information about competitors or masquerading as fans to promote biased opinions, which could potentially be deemed unlawful. For instance, there have been allegations that SM spread false information about the disbandment of the girl group PRISTIN after it was acquired by HYBE. However, in reality, PRISTIN had already disbanded in May 2019 and Pledis Entertainment (its agency) was only acquired by HYBE in May 2020. If it is proven that SM did indeed disseminate this false narrative, it would be considered as an act of spreading misinformation.
The Supreme Court has stated in the past that enlisting marketing agencies to publish disparaging material about rivals amounts to interference with business. The manipulation campaign frequently contained posts that used phrases such as “from a fan’s point of view”and directives to “write as though a fan is angry.”
The source of this information can be found on Naver at the following link: Naver.
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