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(EDITORIAL from Korea Times on Sept. 9)

Editorials from Korean dailies 07:09 September 09, 2021

Kakao under fire
Take steps to curb big tech's excessive expansion

Kakao Corp., the country's largest online platform service provider, is facing growing criticism for its reckless expansion into business areas earmarked for smaller firms in its blind pursuit of profit. Kakao, best known for its mobile chat app KakaoTalk, has been diversifying its portfolio rapidly, inflating its size in a relatively short span of time. However, its aggressive business practices are raising concerns although it has long been a symbol of innovation and growth.

On Tuesday, civic organizations led by the People's Solidary for Participatory Democracy held a debate at the National Assembly, slamming Kakao's excessive business expansion and calling for measures to protect small businesses and consumers.

The number of Kakao's subsidiaries surged to 118 this year from 45 in 2015. This means the big tech firm has the largest number of affiliates following SK Group, the country's second-largest conglomerate. Kakao has made inroads into multiple areas ― banking, real estate, mobility, education and entertainment. It has now grown into one of the two IT tech heavyweights along with Naver that can keep abreast with the nation's top family-run conglomerates. It has succeeded in building the "Kakao Empire."

What matters is Kakao has infiltrated into areas mostly run by small businesses such as chauffeur services, beauty parlors, manicure shops, golf driving ranges, English education, flower delivery and express delivery. For instance, numerous taxi call service providers were forced out of business after Kakao entered the market. Owners of beauty parlors complain that they have to pay a commission equivalent to 25 percent of their revenue to Kakao.

Kakao has been adopting the business tactics of providing fee-free services at first and then collecting increasingly high fees once it monopolizes the market. For instance, it once attempted to raise the basic fare for taxi services from 3,800 won (US$3.20) to 8,800 won ― but to no avail ― after 80 percent of taxi drivers had subscribed to the Kakao ride-hailing platform. It also withdrew its plan to hike rental fees for bikes. Given these actions, criticism has grown over Kakao's bid to reap undue profits through its dominant market status.

The company ranks fifth in market capitalization here, following Samsung, SK, LG and Hyundai Motor. Yet, it has continued to eat away at business sectors set aside for small enterprises, driving them out of business. The government should take proper measures to protect those firms from possible market domination by tech giants such as Kakao and Naver which are spreading their tentacles like an octopus.

In this vein, it is encouraging that the ruling Democratic Party of Korea (DPK) is actively seeking to introduce a series of bills to protect small businesses and promote fair competition. The party is also poised to raise the issue during the upcoming National Assembly audit and inspection of the government and its agencies which will start Oct. 1.

DPK Chairman Rep. Song Young-gil said, "It is not appropriate for Kakao to take unwarranted profits without respecting the values of fairness and co-existence." Song vowed to take steps to boost fair competition and protect small businesses. DPK floor leader Rep. Yun Ho-jung also expressed concern over Kakao, pledging that the party would not sit idly by.

We urge the party leaders to abide by their pledges without fail and work closely with the government to address the problem.

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