Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Kakao founder issues apology over abuse of market dominance
Kakao Chairman and founder Kim Beom-su speaks during a National Assembly's audit, Tuesday. Yonhap
By Baek Byung-yeul
Kim vows to turn K Cube into social enterprise
By Baek Byung-yeul
Kim Beom-su, founder and chairman of internet giant Kakao, apologized over his firm's abuse of its market dominance as the nation's most powerful internet platform operator and promised to urgently address the matter, during a National Assembly audit, Tuesday.
He also vowed to transform its de facto holding company, K Cube Holdings, into an entity that “fulfils its social responsibility without further controversy.”
The chairman was summoned as a witness for an audit held by the National Policy Committee at the National Assembly following increasing criticism that Kakao, the operator of the nation's largest messenger app Kakao Talk, has been threatening small business owners by abusing its monopoly status.
Kim was also questioned over the role of K Cube Holdings ― which he wholly owns ― the largest stakeholder in Kakao with 10.57 percent. The board chairman of Kakao, exercises control over Kakao through his directly owned 13.3 percent stake and the shares held by K Cube Holdings.
The Fair Trade Commission (FTC) has launched an investigation into Kakao following allegations that the internet platform violated the Fair Trade Act. Under the act, conglomerates must submit data on the status of affiliates, shareholders and other information to the FTC every year. If there appears to be a false submission date in this process, the FTC may pursue a complaint.
During the National Assembly audit, Rep. Yun Chang-hyun of the People Power Party, raised the issue of K Cube Holdings and pointed out that Kim has deficient in fulfilling the company's corporate social responsibilities of creating more jobs and paying more taxes.
Yun also questioned over whether K Cube Holdings was violating the country's Banking Act that separates banking and commerce as Kakao is operating the internet-only bank Kakao Bank.
In response, Kim said “K Cube Holdings was established before Kakao.”
“K Cube Holdings was established with the intention of applying the growth method of Silicon Valley in the United States to Korea and we set the goal of fostering 100 chief executive officers,” he said.
Kim added, “K Cube Holdings stopped all business activities due to conflicts in business relations after I established Kakao.”
“I apologize for causing controversy and not taking care of it in advance. K-Cube Holdings is working on a transition to a company that fulfills its social responsibility without controversy and will proceed on this schedule at a faster pace,” he said.
Regarding Kakao threatening small businesses, he also apologized, saying, "I am sorry for causing such problems."
Kakao has been under fire for expanding its business by M&As into taxi-hailing, education and even flower delivery services instead of developing its own business models.