Kakao Mobility Announces Administrative Lawsuit Over 72.4 Billion KRW Fine for 'Call Blocking'

"Partnership Agreement to Prevent 'Call Duplication'"
"After Sufficient Discussions with Licensing Authorities"

Kakao Mobility, which was fined 72.4 billion KRW by the Fair Trade Commission for abusing its monopoly power by blocking taxi calls, has announced plans to file an administrative lawsuit.

On the 2nd, Kakao Mobility stated in a press release, "We regret causing concern due to the FTC's sanctions," and added, "We will sincerely explain our position legally regarding the sanctions and humbly review whether there were any parts that did not meet public expectations."

On the same day, the FTC judged that Kakao Mobility demanded competing franchise taxi operators to enter into partnership contracts to receive real-time operational information and other trade secrets, and blocked calls from Kakao T to drivers affiliated with competitors if they refused. The FTC imposed a corrective order along with a provisional fine of 72.4 billion KRW for restricting competition in the franchise taxi market. They also decided to proceed with a criminal complaint.

Regarding the partnership contracts, Kakao Mobility explained that the purpose was to enhance user convenience through "minimizing call duplication between platforms." They stated that since drivers affiliated with other franchise headquarters repeatedly canceled or rejected Kakao T calls, effectively engaging in selective acceptance, they signed partnership contracts with other franchise headquarters to resolve user inconvenience.

According to Kakao Mobility, to implement the "call duplication minimization" feature, the contracting parties must provide essential information to each other. Kakao Mobility and other franchise headquarters signed partnership contracts based on mutual data provision rather than unilateral information acquisition. The data mentioned by the FTC includes arrival and departure coordinates, travel routes, and real-time GPS information, which are the same as the information obtained when using basic navigation. The only additional data is the identification of which franchise headquarters the taxi belongs to, for minimizing call duplication.

Information additionally received from other franchise headquarters after signing the partnership contracts is not used in any of Kakao Mobility’s businesses. The company’s position is that it is unreasonable to consider this information as having trade secret-level value.

Furthermore, Kakao Mobility claimed that their business method was conducted in consultation with licensing authorities. The franchise taxi service was carried out according to a business plan approved based on the Passenger Transport Service Act and the "One Platform" principle. The One Platform principle states that franchise taxi drivers must use one communication device and one call program designated by the franchise operator. Kakao Mobility explained that in the process of implementing this, they pursued platform partnership contracts with other franchise headquarters to solve service quality issues such as duplicate call cancellations and brand confusion.

The company expressed concern, saying, "If such a business method sets a precedent for severe violation sanctions, the original intent of the existing business direction will be undermined, and future investment incentives may also decrease." They also predicted that no new companies would emerge to introduce new services in the domestic mobility market, which could lead to a reduction in consumer benefits.

Regarding the excessive fine, they also pointed out the issue of reverse discrimination compared to overseas platforms. They cited the reason that an excessive fine equivalent to the total operating profit over the past three years (2021?2023) was imposed, along with a decision to file a criminal complaint, which goes against the global trend of competition law enforcement that does not impose criminal penalties for competition law violations. A Kakao Mobility official said, "Domestic native platforms may fall behind in competition with global mobility platforms that conduct large-scale promotions backed by massive capital due to excessive regulations," and added, "We will sincerely explain to the court through administrative litigation that there was no violation of the law."