Kakao founder vows to reform company

Kakao founder Kim Beom-su plans to shake up the company's management system following President Yoon Suk Yeol's criticism of its monopolistic practices. Kim aims to reevaluate the company's practices and announce solutions by the end of this year.

Kakao founder Kim Beom-su speaks to the local press before attending an emergency meeting with Kakao executives at Kakao Mobility's headquarters in Seongnam, Gyeonggi, on Monday. [NEWS1]

Kakao founder Kim Beom-su told local press on Monday that he plans to “go back to square one” and shake up Kakao's management system as the tech giant is swept under President Yoon Suk Yeol's criticism of its monopolistic market practices.

“Every business aspect of Kakao will go back to square one to be reevaluated to become a company that can live up to its reputation,” Kim said as he briefly spoke to the press before the start of a closed meeting with Kakao executives.

Unlike Kim's previous two weekly meetings with executives, which took place at Kakao's headquarters in Pangyo, Gyeonggi, the third meeting was held at Kakao Mobility’s headquarters in Seongnam, Gyeonggi. Local media outlets have speculated that the move to Seongnam is intended to showcase Kim's determination to resolve Kakao's franchise taxi business operation and related commission system that the president publicly criticized on Nov. 1.

Kim and Kakao Mobility CEO Ryu Gung-seon attended another closed meeting with taxi associations regarding Kakao Taxi's operations and commission fees on Monday afternoon.

Kakao's mobility subsidiary has been under a microscope since Yoon's public backlash. The company was initially hit with a 25.7 billion won ($19.4 million) fine by the market regulator in February for manipulating dispatch algorithms to favor its own franchise taxis above others. Taxi unions have complained about its commission fees, which are higher than those of other mobility platforms.

Kim was clean-shaven when he appeared before the press, having removed the trademark beard that he's worn since he founded the company in 2006.

“As the founder of Kakao, I am receiving many criticisms with a heavy heart,” Kim said. “With guidance from exterior sources, such as the formation of a compliance committee and an autonomous management committee, I will do my best for Kakao to reform its practices, to go back to the company which was beloved by the people.”

Kim promised to “come up with visible solutions by the end of this year and for more of them to be addressed in full scale next year.”

On Monday evening, Kakao and Kakao's Chief Investment Officer (CIO) Bae Jae-hyun were indicted on charges of manipulating SM Entertainment's stocks during its takeover battle with HYBE in February. The CIO was already in custody for alleged violations of capital market laws. Bae was accused of injecting 240 billion won to inflate the price of SM Entertainment's shares and hamper with HYBE's tender offer attempts.

Prosecutors reported that Bae and two other executives manipulated the stock price 409 times on Feb. 16, 17, 27 and 28. They also allege that Kakao also did not report the stock purchases to the Financial Supervisory Service.

The Capital Markets Act states that when a person acquires more than 5 percent of the total number of listed stocks, they need to report the purchase to the financial regulator within five working days.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]