Kakao, Criticized for 'Octopus-Like Expansion'... Continues Win-Win Cooperation

[Asia Economy Reporter Seungjin Lee] Kakao, which has faced criticism for "octopus-like expansion" infringing on local businesses, has presented a win-win plan. Following the publication of the first-ever "Corporate Group Explanation" analyzing the community's business direction and governance structure, Kakao accepted Kakao Mobility's win-win plan containing social responsibility management content and withdrew its plan to sell the mobility unit.

Withdrawal of Kakao Mobility Sale, Core Focus on Social Responsibility

According to the IT industry on the 20th, Kakao withdrew its plan to sell shares of Kakao Mobility on the 18th. Previously, Kakao had been in turmoil while considering selling part of its shares in Kakao Mobility to the private equity fund MBK Partners, which would have made MBK the second-largest shareholder.

Kakao explained, "We respect the will of Kakao Mobility's labor and management to grow sustainably with society and plan to support the implementation." In early August, Kakao Mobility's labor and management formed a "Council for Social and Sustainable Growth" and delivered a win-win plan to Kakao on the 12th.

The key background for deciding to withdraw the sale was that Kakao Mobility prepared a win-win plan containing social responsibility management content emphasized by Kakao. Until now, Kakao Mobility had been at the center of controversy over infringing on local businesses. Kakao's consideration of selling shares in Kakao Mobility was also aimed at escaping such local business infringement controversies.

Hong Euntaek, co-CEO of Kakao, said, "Kakao Mobility and the Kakao Community Center will strive to solve transportation problems based on sustainable innovation that society can empathize with."

Strengthening ESG... First 'Corporate Group Explanation' Published

As a measure to strengthen its commitment to ESG (Environment, Social, Governance) management, Kakao published its first-ever "Corporate Group Explanation" on the 16th.

After last year's National Assembly audit, Kakao promised to reduce its affiliates. Kim Beom-su, former chairman of Kakao, expressed his intention to reform during the October National Assembly audit last year amid ongoing local business infringement controversies. Kakao also emphasized at a press conference in April that it would reduce its affiliates by 30 to 40 by the end of the year.

In particular, the sale of Kakao Mobility was highly symbolic. Since its launch, it had repeatedly clashed with the taxi industry and confronted the designated driver industry, making it the center of local business infringement controversies.

However, Kakao chose a win-win plan instead of selling Kakao Mobility. Rather than hastily meeting the announced affiliate reduction targets, Kakao appears to have adopted a strategy to overcome local business infringement controversies by emphasizing social responsibility and coexistence. According to the "Corporate Group Explanation," the number of affiliates decreased from 139 in April to 134 as of August, falling short of the target.

Furthermore, Kakao's voluntary publication and disclosure of the "Corporate Group Explanation," which is not a mandatory disclosure, is regarded as a very unusual move. This is interpreted as an effort to enhance governance transparency and actively communicate with society about Kakao's business direction and corporate structure.

Previously, Kakao reorganized from a single CEO Namgung Hun system to a dual CEO system with Namgung Hun and Hong Euntaek, demonstrating its commitment to strengthening social responsibility. CEO Namgung Hun oversees business and leads global expansion, while CEO Hong Euntaek strengthens ESG management and oversees sustainable growth strategies.