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South Korea Fines Kakao Mobility $10.5 Million for Antitrust Violations

By  |  December 17, 2024

South Korea’s antitrust regulator has imposed a $10.5 million (KRW 15.1 billion) fine on Kakao Mobility, the ride-hailing arm of tech giant Kakao, for unfairly restricting competitors’ access to its taxi-hailing platform. The revised penalty is a significant reduction from an earlier fine of $50.3 million (KRW 72.4 billion), which the Korea Fair Trade Commission (KTFC) acknowledged had been based on an overestimated calculation of Kakao Mobility’s operating profits.

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    The decision stems from Kakao Mobility’s dominant position in South Korea’s ride-hailing industry, where it operates the widely used Kakao T app. According to the KTFC, the platform limited opportunities for competing taxi services, effectively consolidating its market dominance. As of 2022, Kakao Mobility commanded a staggering 96% share of the taxi-hailing market, per the regulator’s findings.

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    Kakao Mobility’s taxi services are divided into general ride-hailing, which acts as a brokerage for regular taxis, and specialized franchise-hailing services under its subsidiary brand, Kakao T Blue. The Kakao T app integrates both services, offering users a comprehensive platform for transportation. While general taxi-hailing allows all drivers to participate, franchise services offer differentiated features, such as improved car quality and faster pick-up times, to cater to a specific market segment. Competitors, including Uber and local providers like TADA, have faced significant challenges in gaining traction within this environment.

    The KTFC’s scrutiny of Kakao Mobility comes amid growing concerns about market fairness. In a statement released in October, the watchdog highlighted Kakao Mobility’s overwhelming market dominance, which far outpaces its competitors. As of October, the platform boasted 13.2 million monthly active users (MAUs), dwarfing Uber’s 700,000 users and TADA’s 6,400, with other rivals like I’M seeing just 5,800 users, according to local reports.

    In a separate development, Kakao Mobility was fined $2.47 million (KRW 3.4 billion) by the Financial Services Commission (FSC) in November over allegations of accounting fraud. The FSC has referred the case to prosecutors for further investigation.

    Source: Tech Crunch