Kakao Raises 'Paid Service' Card... Growing Friction with Taxi Industry

[Asia Economy Reporter Bu Aeri] Kakao Mobility, which operates the taxi-hailing app ‘KakaoT,’ has sparked renewed conflict with the taxi industry after launching a paid service.

According to Kakao Mobility on the 17th, it launched a ‘Pro Membership’ exclusively for taxi drivers at 99,000 KRW per month the day before. By subscribing to this membership, taxi drivers can use the ‘Destination Booster’ feature, which allows them to quickly check calls to their desired destinations. This feature enables taxi drivers to quickly view the list of calls for a specific destination when they need to move to that location. They can also check a real-time map of call demand in the surrounding area. Areas with high call volumes are marked in darker colors to help quickly identify high-demand locations. Membership also provides notifications if there are registered regular passengers and offers dispatch benefits when a regular passenger calls a taxi nearby.

This has led to interpretations that taxis using the membership are given dispatch priority. Taxi drivers are opposing this, accusing Kakao Mobility, which dominates over 80% of the market with its free call app, of abusing its position. They perceive this as Kakao Mobility’s intention to monetize even the call mediation service. A representative of the National Taxi Labor Union Federation said, "Unless the membership brings more calls, drivers are unlikely to pay for it," adding, "Kakao is testing the waters and will eventually make it a paid service."

Additionally, Kakao recently proposed partnerships to major domestic franchise taxi operators such as Tada, Uber, and KST Mobility (Makgeolli Taxi). The proposal states that franchise taxis from each company must form partnerships and pay commissions to receive general calls generated on ‘KakaoT.’ Until now, passengers calling taxis via KakaoT sometimes received taxis from other franchise companies like Makgeolli or Uber. This occurred because, although franchise partnerships were established with other brands, drivers received free calls through the free mediation service of the ‘KakaoT’ app.

Following this policy decision, four taxi organizations (National Taxi Labor Union Federation, National Democratic Taxi Labor Union, National Private Taxi Transport Business Association Federation, and National Taxi Transport Business Association Federation) issued a statement saying, "They are effectively forcing the payment of high commissions under the guise of business partnerships," and pointed out, "It is suspicious that this is a preliminary step toward imposing call commissions on general member Kakao taxis, not just franchises."

The conflict between Kakao Mobility and the taxi industry is not new. Previously, Kakao Mobility was suspected of concentrating calls only on the franchise taxi ‘KakaoT Blue’ last year. The four taxi organizations filed a complaint with the Fair Trade Commission, and an investigation is currently underway. The taxi industry claims, "Kakao is engaging in market-disturbing practices such as call concentration."

Kakao Mobility maintains that ‘call concentration’ is impossible due to its AI dispatch algorithm. Regarding the controversy over the paid service, Kakao Mobility explained that it is intended to enhance drivers’ convenience. A Kakao Mobility representative said, "Receiving calls does not change based on membership subscription, and KakaoT taxis can be used as before."