Prosecutors Conduct Search and Seizure at Kakao and Kamo Offices on Charges of Violating the Fair Trade Act

The prosecution has launched a compulsory investigation into Kakao and Kakao Mobility over allegations of abuse of power, such as 'call blocking and preferential treatment' against competing franchise taxi operators.

According to the legal community on the 5th, the Financial Investigation Division 2 of the Seoul Southern District Prosecutors' Office (Chief Prosecutor Jang Daegyu) is conducting raids at seven locations, including Kakao headquarters and Kakao Mobility offices, this morning. These corporations are suspected of violating the Fair Trade Act.

This prosecution investigation follows the Fair Trade Commission's (FTC) filing of a complaint against Kakao Mobility last month on the 2nd. Kakao Mobility is a market-dominant operator with a 96% share in the general taxi call market. According to the FTC, Kakao Mobility operates the KakaoT Blue platform, which provides exclusive calls only to affiliated franchise drivers through its subsidiaries, and it is understood to have pursued measures to block general calls to exclude competing franchise taxi operators from the market. This is the so-called 'call blocking' method.

The FTC imposed a corrective order along with a provisional fine of 72.4 billion KRW for Kakao Mobility's violation of the Fair Trade Act. Previously, last year, the FTC also imposed a fine of 27.12 billion KRW for the so-called 'call preferential treatment' allegation, which involved manipulating algorithms to exclude general taxis and funnel calls exclusively to franchise taxis.

The investigation into Kakao Mobility was initially assigned to the Financial Investigation Division 1 of the Seoul Southern District Prosecutors' Office but was recently reassigned to Division 2. The Financial Investigation Division 2 has been investigating cases related to 'SM price manipulation' allegations involving Kakao officials, including Chairman of the Management Innovation Committee Kim Beom-su.