|Kakao Chairman Kim Beom-su / Courtesy of Kakao|
By Kim Jae-heun
Kakao said Tuesday that it will raise 300 billion won in funds for traditional, offline, individual mom-and-pop stores and services as part of its effort to ease public backlash against its aggressive business expansion.
To do so, the company's investment firm, K-Cube Holdings, will be repurposed as a social enterprise for training young people in IT fields and offering educational programs.
"The recent criticism (that Kakao has received) represents a powerful wake-up call coming from society. It is time for Kakao and all of its affiliates to boldly abandon its old business growth strategy and make fundamental changes to fulfill its social responsibilities," Kakao Chairman Kim Beom-su said.
Kakao has come under criticism for "infringing on" the business areas of traditional, offline, mom-and-pop stores and local transportation and delivery services.
Kim, the founder and chairperson of Kakao, also misreported his ownership of K-Cube Holdings, which turned out to be a de facto holding company of Kakao, as the investment firm owns 10.59 percent of Kakao's shares. Kim holds 100 percent of K-Cube Holdings' shares, and the investment firm is run by his family members as well.
The Fair Trade Commission launched an investigation into this case on Monday and Kakao decided to convert K-Cube Holdings into a social enterprise the next day.
Kakao Mobility, which drew the strongest opposition from the local transportation and delivery services sector, will have its business plan amended. Flower and dessert delivery services will be terminated as a result.
Kakao will also cancel its new "smart call" function for its taxi hailing service, Kakao T. Customers complained that the system only forces them to pay more fees under the questionable pretext that it helps them catch taxis faster.
Additionally, the commission fee for Kakao Mobility's designated driver service will be cut by 20 percent.
Meanwhile, the government has been tightening regulations on big tech companies Kakao and Naver, both of which have been attempting to dominate a variety of business sectors with their platform power.