Kakao Mobility and its executives have been brought to trial on charges of demanding trade secrets from taxis affiliated with rival companies and blocking calls if they refused.
The Second Financial Investigation Division of the Seoul Southern District Prosecutors' Office (Acting Chief Prosecutor Lim Se-jin) said on the 26th that it indicted Kakao Mobility and three members of management, including CEO Ryu Geung-seon, without detention on charges of violating the Monopoly Regulation and Fair Trade Act.
From Feb. 2021 to Dec. 2023, Kakao Mobility is accused of abusing its dominant position in the taxi general-calling app market to demand trade secrets such as origin and route information and fees from four small and midsize affiliated competitors.
It is also accused of unfairly interfering with business activities by blocking drivers affiliated with small and midsize franchise companies who did not comply with the demands from using the Kakao taxi app.
Prosecutors judged that Kakao Mobility committed these acts while holding market power, including a 95% share in the "medium taxi app general-calling" market, and referred them for indictment.
According to prosecutors, around Dec. 2020, as competition intensified in the taxi franchise market, the defendants drew up a plan to demand fees from other companies for reasons including brand confusion and to block calls if they did not comply, and decided to carry it out.
At the time, the level of fees Kakao Mobility demanded was two to three times the franchise fee, and prosecutors believe the company sought to use the data secured through this to enhance its navigation and more.
However, the "call favoritism" case reported by the Korea Fair Trade Commission in 2023 resulted in a decision of no charges. The case involved allegations that Kakao Mobility assigned more favorable calls to affiliated drivers than to non-affiliated companies. Prosecutors are said to have concluded, after reviewing the law, that it is difficult to acknowledge the charges.
Kakao Mobility said, "This matter was a legitimate consultation process to prevent free-riding arising from our service quality deterioration and platform operation," adding, "There was no intent or act to restrict competition, and there were no violations of relevant laws."