Previously, SM Entertainment was found to have employed viral marketing companies and directly ordered them to create favorable public opinion during its management dispute with HYBE in February-March last year. High-ranking SM executives were involved in this process.
On July 24, it was also revealed that SM considered recruiting YouTube content creators for this manipulation, as prosecutors investigated a case involving the spread of false information and examined the connections between entertainment companies and YouTube content creators.
Legal experts suggest that SM’s attempts to manipulate public opinion could be illegal.
After HYBE abandoned its acquisition attempt and the management dispute ended in March, Jang Jae-ho was promoted to Chief Strategy Officer (CSO) at SM. This was seen as a reward for his role in manipulating public opinion. Additionally, another employee involved in these activities, identified as Director Choi, was promoted and remains employed by an SM subsidiary.
Choi, who previously founded another entertainment agency in 2020, saw his company acquired by SM’s subsidiary. This raised suspicions of conflicts of interest and the possibility of using company funds to reward individuals involved in public opinion manipulation. SM claimed the acquisition was a business decision, not a reward.
Jang Jae-ho resigned in late 2024 while being investigated by the Financial Supervisory Service (FSS) over allegations of stock price manipulation involving SM and Kakao. Astrafe, closely linked to Jang, was also tied to entities that supported the SM-Kakao alliance against HYBE.
Recruitment of YouTubers
By late February 2024, SM’s public opinion campaign had evolved to include the recruitment of YouTube content creators. A viral marketing firm employee reported to Park, “The setup is complete. YouTube creators have been contacted, and we will discuss Instagram pages tomorrow.”
When asked about this, SM stated they had received proposals to recruit YouTube creators but rejected them as they did not align with their online marketing strategy. However, recent investigations into the spread of false information have found evidence of cash transactions between entertainment companies and YouTube creators.
Legal Implications: Potential Charges for Business Interference
Legal experts suggest SM’s organized public opinion manipulation could constitute business interference. Spreading false information about competitors or posing as fans to post biased opinions could be illegal. For example, SM allegedly spread false information about the disbandment of the girl group PRISTIN after being acquired by HYBE. In reality, PRISTIN disbanded in May 2019, and its agency, Pledis Entertainment, was acquired by HYBE in May 2020. If SM disseminated this false narrative, it would be considered spreading false information.
The Supreme Court has previously ruled that hiring marketing firms to post defamatory content about competitors constitutes business interference. Examples of posts from the manipulation campaign often included phrases like “from a fan’s perspective,” and instructions to “write as if a fan is upset.”