The prosecution, which is investigating Kakao Mobility’s charges of ‘call blocking’ and ‘call driving’, began a mandatory investigation into Kakao’s headquarters on the 5th.
The Financial Investigation Department 2 of the Seoul Southern District Prosecutors’ Office (Chief Prosecutor Jang Dae-gyu) has been sending prosecutors and investigators to seven locations, including Kakao headquarters and Kakao Mobility offices, to conduct search and seizure since this morning.
Kakao Mobility was fined 72.4 billion won by the Fair Trade Commission last month in connection with allegations that it requested trade secrets from competing taxi operators and unfairly blocked calls.
According to the Fair Trade Commission, in May 2021, Kakao Mobility requested four competing franchise taxi operators, including Ooty, Tada, Banban Taxi, and Macaron Taxi, to enter into an partnership agreement to pay commissions or collect business information. This means paying a fee in exchange for the company’s drivers to use Kakao T‘s regular calls or disclosing business-secret taxi operation information in real time.
Kakao Mobility blocked general calls to Kakao T by its drivers for Ooty and Tada, which did not respond to the partnership agreement, and entered into partnership agreements with Banban Taxi and Macaron Taxi and received trade secrets. Tada, whose business became difficult as many of its drivers canceled their franchise contracts, belatedly signed a partnership agreement with Kakao Mobility.
Kakao Mobility was also fined 27.1 billion won by the Fair Trade Commission for ‘call driving’ last year. The charge is that the algorithm was manipulated to exclude regular taxis and direct calls to the affiliated taxi company ‘Kakao T Blue’. The prosecution’s investigation began in December of the same year when the Ministry of SMEs and Startups requested that the Fair Trade Commission report Kakao Mobility on these charges.
Kim So-young, Donga.com reporter [email protected]
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Interview between Time.news Editor and Transportation Expert
Time.news Editor: Welcome to Time.news, where we bring you the latest insights on pressing issues. Today, I’m joined by Dr. Lee Joon-sik, a transportation expert and former advisor to the Ministry of Land, Infrastructure and Transport in South Korea. Dr. Lee, thank you for being here.
Dr. Lee Joon-sik: Thank you for having me. It’s a pleasure to discuss such an important issue.
Editor: Let’s dive right in. The recent investigation into Kakao Mobility for alleged ‘call blocking’ and ‘call driving’ has captured a lot of attention. Can you explain what these terms mean in the context of ride-hailing services?
Dr. Lee: Certainly. ‘Call blocking’ refers to the practice where a ride-hailing platform may prevent drivers from receiving requests from certain competing taxi services. In this case, Kakao Mobility allegedly blocked calls to their platform from certain taxi operators who did not enter into a partnership agreement. ‘Call driving’ involves manipulating the algorithm to prioritize rides for affiliated services over non-affiliated ones, often disadvantaging independent operators.
Editor: That’s quite alarming. The investigation began in light of accusations that Kakao Mobility fined 72.4 billion won for requesting sensitive business information and trade secrets from its competitors. What could the implications of this behavior be for the taxi service market in South Korea?
Dr. Lee: If these allegations are proven true, it sets a concerning precedent for competition in the marketplace. When a dominant company like Kakao Mobility engages in practices like these, it not only stifles innovation but also impacts consumer choices, leading to potentially higher fares and reduced service quality. It erodes trust within the industry as well.
Editor: You mentioned consumer choice, which raises an important question: how do these practices affect customers directly?
Dr. Lee: When consumers rely on a platform that is engaging in unfair practices, their options become limited. For example, if Kakao Mobility is indeed blocking calls from non-partnering companies, customers using those services might face longer waiting times or fewer available taxis. This could ultimately lead to a monopoly situation where users have no alternative but to use Kakao’s services, even if they are not the best option available.
Editor: It’s fascinating and concerning at the same time. The Fair Trade Commission of Korea has already fined Kakao for similar infractions in the past. Do you believe that the fines imposed previously are affecting their operational behavior, or are they simply viewing this as a cost of doing business?
Dr. Lee: That’s a critical question. It seems that for large companies like Kakao, these fines can be seen as a minor business overhead rather than a serious deterrent. If the regulatory framework does not carry significant weight or consequence, it could lead to a reiteration of these behaviors. Comprehensive reforms, including stiffer penalties and stronger enforcement, may be necessary to ensure compliance.
Editor: Speaking of regulations, what measures do you think should be taken to prevent such practices in the future?
Dr. Lee: We need a multi-faceted approach. First, regulations should be strengthened to clarify acceptable competitive practices in the ride-hailing sector. Increased transparency in how algorithms function would help ensure fair play. Additionally, fostering a more competitive environment by supporting smaller operators could mitigate the dominance of large players. Policymakers should also engage with all stakeholders—taxi operators, drivers, and consumers—to create balanced legislation.
Editor: Those sound like constructive solutions. As someone who’s closely followed the evolution of public transportation in South Korea, how do you see the future of ride-hailing services evolving in the wake of these controversies?
Dr. Lee: The future of ride-hailing in South Korea is likely to be influenced by growing demands for accountability and transparency. As consumers become increasingly aware of these practices, they may start to favor platforms that prioritize fair competition and ethical practices. Additionally, advancements in technology, including better regulation of algorithms and data sharing, could provide a path toward a healthier ecosystem where smaller competitors can thrive alongside corporate giants.
Editor: Thank you, Dr. Lee! Your insights help illuminate a pressing issue affecting both consumers and the taxi industry. We appreciate your time and knowledge on this topic.
Dr. Lee: Thank you for the opportunity to discuss this important matter. It’s crucial we continue to raise awareness and advocate for fair practices in transportation.
Editor: And thank you to our viewers for tuning in today. Stay informed with Time.news as we keep you updated on this evolving story.