Kakao Mobility may face trouble due to unfair taxi-hailing practices

The Startups Ministry said Tuesday it will ask the antitrust regulator to file a complaint with the prosecution against Kakao Mobility, the operator of the country's top taxi-hailing service, on charges of unfair business practices.

[MINISTRY OF SMES AND STARTUPS]

The Startups Ministry said Tuesday it will ask the antitrust regulator to file a complaint with the prosecution against Kakao Mobility, the operator of the country's top taxi-hailing service, on charges of unfair business practices.

Kakao Mobility is suspected of manipulating its algorithm to give more of the calls received on its mobile taxi application to cabs under its franchise.

The app is open to both franchise and non-franchise taxis, but it allegedly allowed franchise taxis to receive ride requests even when non-franchise taxis were located closer to clients.

The Ministry of SMEs and Startups said it made the decision considering that Kakao Mobility "hindered fair competition by breaking the law" and inflicted big financial damage on drivers who do not have its membership.

Kakao Mobility is set to undergo a prosecution investigation as the Fair Trade Commission (FTC) must report the case to the prosecution upon the Startups Ministry's request.

Earlier this year, the FTC slapped 25.7 billion won ($20.7 million) in fines on the company, but did not file a complaint with the prosecution.

It cut its commission rate to 2.8 percent from the previous 5 percent starting in the first half of the year, following President Yoon Suk Yeol’s open criticism of the company.

It also faces an investigation by the financial regulators, which are determining whether the company exaggerated its revenue by inflating its commission fees.

Kakao Mobility said it will "faithfully cooperate" with the upcoming procedures and continue to improve its call distribution system to "increase convenience for consumers and drivers."

BY JIN MIN-JI, YONHAP [jin.minji@joongang.co.kr]