[Invest&Law] Tada files 10 billion KRW damages suit against Kakao Mobility for 'call blocking'

Tada Taxi Drivers Claim 'Call Blocking'
Fair Trade Commission Sanctions... Seoul Southern District Prosecutors' Office Investigating

The legal dispute between mobility platform Tada and Kakao Mobility has begun as Tada filed a lawsuit demanding about 10 billion KRW in compensation from Kakao Mobility. The claims of business damages due to unfair practices and the rebuttal that these were choices to prevent service quality degradation are expected to clash.

According to industry sources on the 19th, Tada recently filed a lawsuit against Kakao Mobility at the Suwon District Court Seongnam Branch, demanding compensation for damages caused by 'call blocking' and 'call favoritism.' A Tada representative stated, "Kakao Mobility's repeated unfair practices have not only hindered the development of the mobility industry but also threatened the survival of companies," adding, "Through this lawsuit, we aim to receive rightful compensation and establish a fair competition culture throughout the industry."

On the 5th, with the implementation of the Passenger Transport Service Act amendment, known as the Tada Ban Act, just around the corner, a 'Tada' vehicle is parked at a garage in Yeongdeungpo-gu, Seoul. Photo by Moon Ho-nam

The core issue of the lawsuit is expected to be whether call blocking and call favoritism constitute an abuse of market dominance. Call blocking refers to the policy of not assigning KakaoT general calls to other affiliated taxis such as Uber and Tada that do not have partnership contracts with Kakao Mobility. Tada also raised suspicions that Kakao Mobility modified its dispatch algorithm to favor its affiliated taxis, KakaoT Blue, by giving them more calls, a practice known as 'call favoritism.' In this regard, the Fair Trade Commission has considered these actions as abuses of market dominance. Given that KakaoT calls account for over 90% of the domestic taxi call market share, fines of 15.1 billion KRW and 27.1 billion KRW were imposed for call blocking and favoritism, respectively. Additionally, the Fair Trade Commission reported both cases to the prosecution, and the Seoul Southern District Prosecutors' Office is currently investigating.

Kakao Mobility maintains that these policies were implemented to prevent duplicate and repetitive call refusals (selective picking). The company stated, "We have not yet received the complaint, so it is difficult to make an official statement," but explained, "These measures were taken to enhance user convenience, not to favor affiliated taxis." Regarding call blocking, they said, "We pursued platform partnership contracts with other affiliated taxis to prevent unilateral call cancellations by drivers and brand confusion, which degrade service quality." As for the call favoritism allegations, they explained, "The dispatch algorithm was adjusted to reflect the acceptance rate of dispatches to reduce ride refusals caused by taxi drivers selectively picking only good calls." Kakao Mobility has appealed both Fair Trade Commission sanctions and initiated administrative lawsuits.

Within the industry, there is an interpretation that the conflict between the two companies deepened after the so-called 'Tada Ban Law' was passed. In September 2018, Tada Basic, a rental car-based ride-sharing service, emerged, positioning Tada as a competitor to Kakao Mobility. However, after the Tada Ban Law passed the National Assembly in early 2020, Tada's business declined and was eventually acquired by Toss in 2021. At that time, the mobility industry regarded Kakao Mobility as the biggest beneficiary of the Tada Ban Law.

Attorney Jeong Kyung-hwan (Barun Law LLC) explained, "Since the Fair Trade Commission's sanctions have confirmed illegal acts, even if Tada does not receive the compensation amount it desires, it is highly likely that the existence of damages will be recognized."