It's no secret that Google has been smoked by the local incumbent Naver in Korea. Naver has a 70% market share, while Google has less than 2% market share in Korea. This was once more reiterated by this recent Businessweek article.
What's apparently missing from the article is the "why" - ie. why Naver trumps Google, or put differently, how Naver gives more relevant search results than Google.
Well, the "why" is not much of a secret either, but just to say it again, it's because Naver is using A LOT OF human effort, while Google does not, depending only on its automated algorithms.
At Naver, people - these days more and more Korean-Chinese part timers outsourced at cheap prices - analyze, index, or even produce(!) content manually. Then those Naver part-timers feed the data back to Naver's search engine, helping the search engine produce more relevant results on a specific query.
Try searching for Park Ji-sung, the Korean footballer on Naver and on Google and compare the results. Naver will give every gory detail about Park, such as TV airtime of Park's next game. (Again, some of these content are aggregated, edited, and indexed by Naver people.) Google? It just gives the list of indexed articles that contain the name of Park. Naturaly, people feel Naver search result is far better and even "more human."
The fact that the nation's search is dominated by Naver has its down side as well. The nation's zeitgeist becomes more and more unified - essentially, Naver's top search keyword IS the national zeitgeist. Hence the title of this post: Korea, a "Naverized" nation.
This goes against the spirit of open internet and can be seen by some people as something evil. So there's been backfires but Naver is simply too big to be budged. Besides, no one can really blame a company that tries to maximize its profit and secure its market position.
This "Naver domination" should definitely be a shame for Google. Google launched Korean version search service six years ago, and still only has less than 2% market share in Korea, the 9th-ranked country in Tech Index. It will be interesting to see how Google will battle back in Korea.
Meanwhile, if you are a tech entrepreneur in Taiwan, Germany, Indonesia, or France, then you might also consider launching the "Naver of your country" - Focus on the topics that are most relevant to your area/country/language, and use human resources to produce optimal search results for those topics. Chances are you might smoke Google at least in your own turf... who knows? :)