Kakao Mobility to spend W50 bil. for mutual growth

Kakao Mobility CEO Ryu Gung-sun speaks during an online press conference, Thursday. Courtesy of Kakao Mobility

By Lee Kyung-min

Kakao Mobility will spend 50 billion won ($41 million) over the next five years to create a healthy mobility market ecosystem, defined by inclusive growth with the service providers ― taxi drivers.

The plan announced Thursday is part of efforts to offset brewing criticism that the mobility affiliate of Korean IT giant Kakao Corp has built its bulky business portfolio as a comprehensive mobility platform over the past few years at the expense of other smaller market players including low-income workers in the industry.

An investigation is currently underway by the Fair Trade Commission (FTC), Korea's antitrust regulator, into Kakao Mobility, after a group of the country's taxi drivers filed a complaint over the suspected manipulation of a platform algorithm to put through a far greater number of ride-hailing calls to drivers who paid a membership fee over those who did not. The firm has since denied the allegation.

“I am aware of the criticism and concerns about us threatening the livelihoods of the small market players as well as about the firm's involvement in increasing calls for our member drivers,” Kakao Mobility CEO Ryu Gung-sun said during an online press conference.

“I feel responsible for how the events have unfolded in the past. We will come up with measures to bolster trust, with mutual growth and environmental, social and corporate governance (ESG) considerations factored in,” he said.

Of the 50 billion won, 37 billion won will be spent to increase profits for taxi drivers and designated drivers, while 8 billion won will be used for improving the work environment for the mobility industry. The remaining 5 billion won will be used to help small businesses.

The amount might seem insufficient, but the amount is significant for the firm which saw its annual profit exceed 10 billion won last year, he added.

“We plan to improve the mobility rights of the physically challenged and for other benefits for workers in the mobility industry, including their living expenses and education expenses for their children.”

The measures reflect the growing frustration of many taxi drivers over the Kakao affiliate's rapid growth amid the COVID-19 pandemic, explained in part by the plummeting number of drivers.

The number of taxi drivers nationwide hired by taxi operating companies has dropped 26 percent over the past two years, and those in Seoul plummeted 31 percent, figures which Ryu said sparked and amplified the conflict.

“We have experienced tensions with the taxi industry over the past few years. We will continue to seek cooperation,” he said.