Gyeonggi governor slams Baedal Minjok for 'raising ad fees'

By Jun Ji-hye

Gyeonggi Province Governor Lee Jae-myung has strongly criticized the nation's leading food delivery app Baedal Minjok, operated by Woowa Brothers, for abusing its market power over restaurant owners, saying the company is trying to profit excessively by raising costs on restaurants.

Lee said the provincial government will push for developing a low-fee food delivery app to help restaurant owners save costs.

The criticism comes as Woowa Brothers implemented its new advertising fee system, dubbed “Open Service,” April 1, charging restaurant owners a 5.8 percent fee per order to get their banners displayed on the upper section of the app. A flat sum system dubbed Ultra Call, which charges the owners 88,000 won ($71) per month, was scaled back.

Restaurant owners have reacted against the new fee system, saying it will force them to pay more fees.

Governor Lee wrote on his Facebook account, Sunday, that the Fair Trade Commission (FTC) as well as municipal administrations and other government offices are all responsible for inhibiting monopolies and abuses of market power.

“It will be the most appropriate to resolve the issue through the passage of relevant laws, but I will not wait for this. Gyeonggi Province will begin with things it can do now, including the development of an app operated by the public sector,” Lee wrote.

Lee said he will consult with Gunsan Mayor Kang Im-june on developing the app, as Gunsan City has already developed a similar app.

In December last year, Baedal Minjok was sold to Berlin-based online food delivery service Delivery Hero, which already owns the nation's second-largest and third-largest food delivery apps, Yogiyo and Baedaltong.

Once Delivery Hero completes all the procedures to take over Baedal Minjok, the acquisition will allow the German firm to secure almost a 100 percent share of the delivery app market in Korea.

The German company's move to monopolize the domestic delivery app market has raised concerns that restaurant owners and other self-employed people in addition to delivery riders and consumers will be unfairly exploited by food delivery-related apps.

The Korea Federation of Micro Enterprise issued a statement, Saturday, calling Baedal Minjok's restructured fee system “a unilateral increase in fees.”

“Fees that restaurant owners need to pay will increase exponentially under the new system,” it said, calling on the FTC to carry out a thorough inspection.

Amid intensifying controversy, Woowa Brothers CEO Kim Beom-joon issued an apology, Monday, saying, “We accept criticism that we have introduced the new fee system after failing to understand difficulties that restaurants have faced amid COVID-19 outbreak.”

The company vowed to return 50 percent of fees that the owners paid in March and April, and come up with more suitable countermeasures to protect restaurants owners.