Kakao Mobility under fire over monopolistic expansion in chauffeur-hailing service

Kakao Corp., under fire for riding on M&As for expansion instead of self-developed innovation, enters deeper conflict with chauffeur-hailing industry after it took over two agencies in a month.

According to industry sources, Kakao Mobility took over two designated driver service providers in late August through its wholly owned subsidiary CMNP. The names of the two companies are unknown.

A designated driver service company provides on-call driving service for people who are incapable of driving due to drinking or other reasons.

The takeover came just a month after Kakao Mobility acquired a controlling stake in 1577 Chauffeur business from the country’s largest on-call designated driver service company Korea Drive.

Local chauffeur service providers are heavily protesting against Kakao Mobility’s rapid expansion with fears of the internet giant monopolizing the market.

The Korea Service Driver Society trade association currently is seeking to prevent large enterprises from entering the on-call driving service market. The trade association on Aug. 26 met with Kakao Mobility and another conglomerate-backed transportation service provider T Map Mobility to discuss mutual growth agreement for large and small players in the market. But the conflict only grew stronger after exiting players found out about Kakao Mobility’s new additions.

“Making the acquisition during the talks for mutual growth proves that Kakao Mobility did not have the will” for fair competition with small players, said a Korea Service Driver Society official who asked to be unnamed.

Kakao Mobility countered the accusation, claiming that it gained agreement from the association on the latest acquisition deals, and it suspended reviewing all other deals that were under discussion upon the direct request from small companies under liquidity squeeze from Covid-19.

The association, however, denied agreeing with Kakao Mobility on the takeover deals made in late August.

Korea Service Driver Society estimates Kakao’s share in the Korean private chauffer service market to reach 65 percent whereas the internet giant argues its share would be smaller than 50 percent.

Kakao Group is under heavy public criticism for its rapid expansion across the businesses through its power built up from Kakao Talk, a chat app that almost all Koreans use.

On Tuesday, shares of Kakao Corp. fell 2.08 percent to close at 117,500 won ($99.21). Kakao Mobility is not listed.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]