Should Kakao Mobility's Growth be Regulated?

Have you ever used Kakao taxi to get around? Kakao Taxi is the most representative service offered by Kakao Mobility. However, Kakao Mobility is much more than just a taxi service. The Kakao Mobility group includes services such as Kakao T, Kakao T-Bike, Kakao T-Map and Kakao Navigation. They are transportation focused and are regularly creating and updating their database access apps with the goal of growing their products and services. Their efforts are generating results. The number of users accessing Kakao Mobility platforms has risen substantially over the last 4 years. According to the “2019 Kacaro Mobility Report” authored by Kakao Mobility CEO Ryu Geung-sun and Jeong Ju-hwan, Kakao, the group has put forward many diverse and growing services over the last few years. For example, in the Kakao T (Kakao Taxi) sector, the rate of usage has grown from 1.2 percent in 2015 to nearly 10 percent in 2019 with the number of users exceeding 23 million this year. As a result, Kakao Mobility is growing day by day as the number of consumers taking advantage of their services rises. At the same time, complaints about their growth are reverberating from everywhere. From a consumer perspective, there are no problems related to Kakao Mobility's growth, but from an industry perspective, there are several emerging conflicts and complaints.

▲ The Logo of Kakao Mobility (Photo from Kakao Mobility homepage)

First of all, the unchecked expansion of Kakao Mobility limits the growth of start-up companies. From the consumer's perspective, Kakao Mobility's growth means more convenient and diverse services for them to choose from, but for start-up companies, the problem is more severe. Competing with a large corporation like Kakao Mobility with its deeply lined pockets and links to many other transportation related services is likely to be overwhelming for most start-up companies. Even if start-ups provide innovative products to consumers, it will not be to compete with the services that Kakao Mobility can offer at a more competitive price.

Should we be left with only one large company controlling the market, the emergence and growth of small and medium enterprises will be virtually impossible and this will eliminate any means we have to keep a large business such as Kakao Mobility in check. If the government does not actively support the growth of small and medium-sized companies, Kakao Mobility, may end up dominating the market which is detrimental to consumers. If Kakao Mobility becomes a monopoly in the transportation business market, the number of suppliers of transport services will decrease, leaving consumers in the hands of a single provider. In this monopolistic market, economic inefficiency is bound to become prevalent and the market leader will inevitably begin to ignore consumer rights and will be free to raise prices at will. There is no check and balance in a monopolistic system.

Furthermore, the unchecked growth of Kakao Mobility will have a negative impact on other transportation service providers. While Kakao Carpool drew the attention of many users in December 2018 because it had the advantage of convenient and diverse destination choices for ordinary consumers, the emergence of Kakao Carpool has dealt an excessive blow to the ordinary taxi industry. As the transportation market has become crowded with Kakao service options, preferences for taxis with different characteristics such as carpooling has greatly reduced the need for regular taxis impacting the livelihoods of regular drivers. As the protest against Kakao Carpool have shown, workers who have lost their capital could face another crisis.

Moreover, safety is a concern with the use intermediary service providers used by Kakao T. Kakao Mobility hasn’t specified how they will deal with accidents that could occur when using their intermediary service providers. For instance, it is unclear who is responsible for accidents or other problems when using Kakao T. At a time when the market share of Kakao T is increasing, it is doubtful whether consumers will be able to continue to use their services with confidence.

The unfettered growth of Kakao Mobility is not beneficial to consumers and must be regulated by the government in order to maintain market stability. While it is true that Kakao Mobility should continue to promote themselves as a company providing meaningful services to consumers, they should have a broader perspective of the marketplace and consider the transportation service industry as a whole, in order to ensure it continues to benefit the consumer over the long haul, instead of simply maintaining its current narrow view, looking only at its own companies and their growth and expansion. At this point, I wish the company was reborn as a symbiotic presence, rather than a selfish one.