"If you don't give me trade secrets, I'll block calls." Kakao M fines of 72.4 billion won, prosecution charges

Abuse of overwhelming control to demand article information and driving information

Blocking Competitor Taxi Calls Rejected Business Secrets Agreement

Kakao M occupies 96% of general calls and 79% of private taxis.

Kakao Mobility, which abused the overwhelming market power of the taxi general call market to demand business secrets from rival taxi operators and blocked calls if they refused, will be sanctioned by the Fair Trade Commission with a provisional fine of 72.4 billion won and prosecution charges.

The FTC said Kakao Mobility, which has secured an overwhelming market share of more than 90% since starting its general call service in 2015, demanded driver information and real-time driving information from its competitors when it started its franchise taxi business in 2019, and blocked general calls if it did not respond.

As a result, normal competition has become impossible, and Kakao's market share in the merchant taxi market as well as the general call market has increased by more than 27 percentage points in two years to 79 percent as of 2022, the FTC said.

In addition, competitors who have experienced a surge in drivers' termination of membership have been kicked out of the market one after another, leaving only Wooty, which has a more than 10-fold market share in the current merchant taxi market.

Considering the significance of the anti-competitive act of unfairly using market power, the FTC tentatively calculated 72.4 billion won, or 5% of related sales, as a penalty from May 12, 2021, the confirmed illegal period, to the end of July this year.

However, Kakao Mobility said it will file an administrative lawsuit, saying that the contract was signed on the premise of providing mutual information to resolve user inconvenience and did not use the information obtained from other operators for its business.

The amount of fines to be imposed this time will be reduced if the Securities and Futures Commission decides Kakao Mobility's accounting standards by net amount method, not total amount method, according to the Financial Supervisory Service's point.

Last year, Kakao Mobility was fined 25.7 billion won by the FTC for manipulating its distribution algorithm to drive calls that favored its franchise taxis.