Kakao Mobility "Franchise Taxis Contribute to Resolving Ride Refusal Issues"…Point-by-Point Rebuttal to Seoul City

[Asia Economy Reporter Seungjin Lee] Kakao Mobility, which operates the KakaoT platform, has strongly refuted Seoul City's claim that Kakao Taxi prioritized dispatching to long-distance passengers and funneled calls to affiliated taxis.

On the 24th, Kakao Mobility stated in a press release, "The Kakao T platform does not distinguish between long-distance and short-distance calls when delivering them to drivers, nor does it prioritize matching long-distance call passengers. It does not select passengers to pick up."

"‘Not displaying destination’ method is not a fundamental solution"

Earlier, Seoul City announced the results of its first field survey to verify whether Kakao Taxi actually selects passengers to pick up. Seoul City explained that the investigation detected circumstances where passengers were selected based on their destinations. They also claimed that some instances of call funneling, which the taxi industry has pointed out, were confirmed.

In response, Kakao Mobility emphasized that while Seoul City stated that platform taxis select passengers, the phenomenon of selective passenger pickup (call cherry-picking) is "not a problem caused by the Kakao T taxi platform, but an old issue in the taxi industry where drivers engage in this behavior during peak hours with severe supply-demand mismatches to earn higher profits."

The investigation was conducted during morning and evening rush hours and between 9:00 PM and 10:30 PM, when passenger demand surges due to COVID-19 related business restrictions. These time periods are representative peak hours that have long suffered from chronic difficulties in finding taxis due to reduced taxi supply and a surge in demand.

Kakao Mobility also rebutted Seoul City's proposed solution to the selective pickup issue?the ‘not displaying destination’ method?arguing that it is difficult to fundamentally resolve the problem. Since displaying the destination is not the root cause of cherry-picking, removing destination display does not increase drivers’ incentives to accept calls.

Previously, T-money, a private company in which Seoul City is the largest shareholder, developed taxi apps such as Jibro and S Taxi, operating with the ‘not displaying destination’ method. However, the service was discontinued as taxi drivers turned off or did not use the apps. Kakao Mobility also introduced the ‘not displaying destination’ method when launching smart calls in 2018, but it resulted in a significant drop in drivers’ call acceptance rates.

'Call cherry-picking' fundamentally caused by supply-demand mismatch

Kakao Mobility expressed concern that the unconditional adoption of the ‘not displaying destination’ method could rather reduce passenger convenience. During peak times when taxi supply is absolutely necessary, drivers might ignore calls if they cannot know the destination, preferring to avoid app or phone calls altogether.

In response, Kakao Mobility explained that through new services such as Kakao T Blue, Venti, and Black, they provide an automatic dispatch service where destinations are not displayed, and have introduced flexible call fees and fare systems to address the cherry-picking issue.

"Affiliated taxis actually help resolve refusal issues of regular taxis"

According to Seoul City's survey results, the higher dispatch rate for short-distance calls (46.2%) compared to long-distance calls (31.1%) to affiliated taxis is actually evidence that affiliated taxis help resolve refusal issues of regular taxis, Kakao Mobility argued.

According to Kakao Mobility, when comparing the short-distance (under 5 km) dispatch success rates between the first half of 2019 and the first half of 2021, the dispatch success rate for affiliated taxis increased by 9 percentage points from 64.6% to 73.7% during the same period.

A Kakao Mobility official emphasized, "Interpreting the higher operation rate of affiliated taxis as including non-preferred calls refused by regular taxis and claiming the possibility of call funneling to affiliated taxis is an overinterpretation."

Furthermore, Kakao Mobility pointed out the limitation of the sample size, noting that the investigation was conducted on only 841 calls, which account for a mere 0.0005% of total trips in Seoul. According to major transportation statistics released by Seoul City, the annual number of taxi rides in 2021 was approximately 300 million, estimating about 750,000 taxi rides per day.

A Kakao Mobility official explained, "Although Seoul City stated that ‘the dispatch rate of regular taxis was generally higher during weekday morning hours,’ it expressed the data as if ‘affiliated taxis had a higher dispatch rate during all morning hours.’ Even though the dispatch rate of regular taxis was 100% for long-distance evening and night calls between downtown areas, this was not considered, and the possibility of call funneling to affiliated taxis was suggested. This lacks objectivity in data interpretation."

Meanwhile, the Korea Fair Trade Commission is expected to complete its investigation into the ‘call funneling’ allegations against Kakao Taxi by as early as next month and proceed with sanction procedures. This investigation began after taxi organizations filed complaints in 2020, suspecting that Kakao Mobility funneled passenger calls to Kakao affiliated taxis. The Fair Trade Commission is also expected to review Seoul City's field survey results on Kakao Taxi’s ‘call funneling’ allegations.

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