[2021 National Audit] CEO Ryu Geung-seon "Withdrawal of Additional Acquisition of Proxy Companies"... Difficult to Give Immediate Answer on Franchise Taxi Commission Reduction

Ryu Geung-seon, CEO of Kakao Mobility Photo by Yonhap News

[Asia Economy Reporter Eunmo Koo] Kakao Mobility has decided to withdraw its acquisition plans for two telephone-call (phone-hailing) designated driver companies it had been pursuing. However, it stated that it is difficult to give an immediate answer regarding the reduction of commission fees for franchise taxis.

On the 5th, at the National Assembly Science, Technology, Information and Broadcasting and Communications Committee’s audit, Ryu Geung-seon, CEO of Kakao Mobility, who appeared as a witness, said, “We will withdraw the acquisition of the two telephone-call designated driver companies recently pursued.”

In response to a question from Cho Seung-rae, a member of the Democratic Party of Korea, asking, “Recently, Kakao Mobility announced plans to additionally acquire (telephone-call) designated driver companies, which has caused backlash in the industry. Do you intend to stick to the plan as is?” he answered accordingly.

Previously, Kakao Mobility had planned to acquire two additional telephone designated driver companies through its subsidiary CMNP, which sparked opposition from the industry. At the end of July, Kakao Mobility officially entered the telephone-call market by establishing a new corporation with the number one telephone-call service ‘1577 Daeriunjeon’ and promised to abolish the taxi smart call function, reduce paid membership fees for taxi drivers, and lower brokerage commissions for designated drivers. However, as market share expanded, criticism of monopoly arose, and opposition grew mainly among telephone-call designated driver companies.

However, regarding the demand to reduce commission fees for franchise taxis, it was difficult to give an immediate answer. On the same day, Jeon Hye-sook, a member of the Democratic Party of Korea, pointed out that franchise taxis (KakaoT Blue) take a 20% commission from taxi drivers and asked if the commission could be lowered. In response, CEO Ryu said, “It is difficult to give an immediate answer.”

Currently, Kakao Mobility has a five-year contract with taxi operators subscribed to the franchise taxi service ‘KakaoT Blue,’ charging a 20% commission on sales, and through its subsidiary KM Solution, it has two types of contracts that pay them 16.7% every three months.

The fact that the call fee is up to 3,000 KRW more expensive than the regular taxi call fee was also pointed out. Representative Jeon asked CEO Ryu, “The basic taxi fare is 3,800 KRW, but during peak times, you have to pay up to 3,000 KRW more to call a taxi. Do you have any plans to improve the significant price difference in call fees?”

CEO Ryu replied, “The reason general calls do not work is partly due to the actual shortage of vehicles available for dispatch during peak times and partly because drivers selectively accept calls.” He also said, “KakaoT Blue includes various additional services beyond calls, so there are upfront investment costs involved, and therefore, pricing it the same as general calls is something that needs to be considered.”

This content was produced with the assistance of AI translation services.