Kakaomobility initiates comprehensive overhaul amid controversies

[Courtesy of Kakaomobility]

Kakaomobility, embroiled in controversy over high commissions and allegations of monopolizing call orders for franchise taxis, is gearing up for a comprehensive overhaul, including a reduction in commissions.

The move comes as Kakao enters an emergency management phase and follows a decision made during a Kakao community management meeting held on November 6, chaired by Brian Kim, who founded Kakao and currently heads the Mirae Initiative Center at the company.

On Tuesday, Kakaomobility released a plan for a comprehensive restructuring of its operating system which includes establishing a rational fee structure that meets the public’s expectations, complete reexamination of its franchise taxi business structure, opening up Kakao T platform (call services) to other taxi companies, and improving the work environment for taxi drivers.

The company also denied rumors that it is selling its business, saying that the sale of Kakaomobility is not something Kakao is currently considering.

Back in February 2023, the Korea Fair Trade Commission (KFTC) imposed a corrective order and a fine of 27.1 billion won ($20.8 million) on Kakaomobility for allegedly monopolizing taxi call orders solely for KakaoT franchise drivers. Although the Seoul High Court ruled in favor of Kakaomobility’s appeal and suspended the order, the case took a new turn in August 2023 when the KFTC appealed to the Supreme Court.

In response to these events, five individual taxi drivers, who claimed to have suffered harm from Kakaomobility, formed a litigation group with the participation of People’s Solidarity for Participatory Democracy and are pursuing a collective lawsuit against the company.

Kakaomobility is also facing scrutiny over allegations of accounting irregularities with its accounting figures in the 300 billion won range, when it sought to go public.

In the wake of recent events surrounding Kakao affiliates, including allegations of stock price manipulation to take over SM Entertainment, Kim launched and chaired a management reform committee on Monday.