Kakao Mobility cuts fees after President Yoon's criticism

Kakao Mobility, Kakao's ride-hailing affiliate, will reduce its commission rate following criticism from President Yoon Suk Yeol. The lower rate will apply to franchise taxis.

Kakao Mobility executives and representatives from taxi unions pose for the photo after agreeing to the company's lower commission rate at a meeting on Wednesday. [KAKAO MOBILITY]

Kakao Mobility, a ride-hailing affiliate of Kakao, will cut its commission rate to 2.8 percent from the current 5 percent starting in the first half of next year, following President Yoon Suk Yeol's open criticism of the company.

The decision was reached during a closed-door meeting on Wednesday evening between Kakao Mobility executives and taxi unions.

The lower commission fee will be implemented for Kakao Mobility’s franchise taxi business.

“Although it has not been finalized, the company is likely to maintain the existing service [with the higher commission fee] and also run a separate new service,” a Kakao spokesperson said.

Under the new service, Kakao’s mobility arm will take on the initial costs of measures such as wrapping the vehicles with the Kakao Taxi logo while changing its business structure to commercialize ads featured on Kakao Taxi vehicles and distributing the revenue it makes to drivers.

Kakao Mobility will also abolish its paid membership program for unaffiliated drivers this month. The membership collected 39,000 won ($30.08) monthly from unaffiliated taxi drivers and provided real-time maps that indicated where ride requests were concentrated and recommended profitable jobs.

The company plans to develop a new AI-powered ride-dispatching system in response to taxi drivers’ complaints about the platform’s existing algorithms favoring its own franchise taxis.

The new AI will automatically assign callers to the closest taxi.

A new function will also allow taxi drivers to directly manage recommended call dispatches.

Meanwhile, financial regulators are still in the middle of investigating Kakao Mobility to determine whether the company exaggerated its revenue by inflating its commission fees.

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