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363. Is Kakao a Public Enemy?

Lee, Dong-eun 기자2016.11.07 12:25:19

           Kakao Corporation and Daum Communications Corporation, Korea's two most-tracked IT firms, officially announced their merger in May, 2014, becoming a new industry giant valued at close to ten trillion won. The merger was such that Daum, the country's second-largest search engine, took over Kakao, which is the provider of the popular messenger service Kakao Talk, although Kakao's market value was nearly four times that of Daum's estimated two trillion won. Kakao, in turn, which initially planned to go public next year, got a backdoor listing through the merger on the secondary bourse, the Korea Securities Dealers Automated Quotation (KOSDAQ). Likewise, the operator of the mobile messenger is expanding its role from just connecting users, to offering a lot of convenient services in every aspect of people's lives. However, many critics have argued that the ideas for their aggressive Online to Offline (O2O) services have been poached from Startups and small businesses and have taken away the opportunities to expand their services. There is no doubt that KaKao is an important part of our modern lives, so it is remarkable to think about how this venture business success story, based on the strength of the mobile platform, has become a public enemy.

           The most fundamental issue here is that Kakao is expanding its business lines just as an octopus spreads its arms, even though some Startups and small businesses have offered similar services. KaKao has posed a threat to them since 2015, when it first launched Kakao Taxi. This  was very successful, being provided for free to more than 40 million KaKaotalk members. Then, KaKao extended its range to Kakao Black Taxi, which targeted the users of deluxe taxis so that many call-taxi companies and deluxe taxi drivers reacted strongly. Consequently, Remotaxi, which had launched the call-taxi business before Kakao, could not attract investment and went out of business. After that, KaKao accelerated its launching of O2O services and released Kakao Driver, a chauffeur service, despite opposition from the association of chauffeur services, which held a rally urging its withdrawal. However, Kakao Driver has been criticized for its expensive fees and the commission which drivers have to pay. In addition, the pre-existing housekeeper and parking lot reservation services have suffered greatly, to the extent that some have decided to close. Nevertheless, Kakao is planning to roll out a hair shop reservation service, a quick delivery service, a flower delivery service, and an Internet banking service by early next year.

           While Kakao has been a model of entrepreneurship, some critics point out that it has delayed the investment in some businesses that had  already been launched by large enterprises, as well as future-oriented new ones. This means that Kakao has targeted the markets already set up by Startups and small businesses, which were not that risky and competitive. For example, Kakao once launched Kakao Order, so that people could pre-order some beverages before going to coffee shops. However, this venture was dropped, since Syrup Order of SK Planet had set up a similar service. Kakao also stopped its Kakao Time Coupon after the pilot project, since Syrup Wallet of SK Planet and Yap of Yap Company cover the same ground. Similarly, a social commerce system named Kakao Pick was suspended, being overwhelmed by the three existing services; Coupang, Wemakeprice and Timon. Many Startup officials criticized this phenomenon, saying that Kakao has disturbed the market for those entering and looking for investment, resulting in raised launching fees and finally leading to a monopoly.

           Of course, it is reasonable for Kakao to pursue its own profits as an enterprise, and its improvements have shown merits can benefit a depressed market, resulting in more jobs and better treatment for workers. However, the criticisms that it has adversely affected Startups and small businesses clearly have a point. Google and Facebook were developed based on the same mobile platform as Kakao, but they have concentrated on future-oriented services, rather than blindly extending their businesses. Google has invested in Artificial Intelligence research and the development of Automatic Under Vehicle or space. Facebook has also been involved in utilities like free Internet services, aiming at the global market, as well as trying to develop pilotless aircraft or satellites. Even though these are extremely large enterprises compared with Kakao, it is desirable for Kakao to donate its prosperity to society by engaging in similar investment and support. Positive competition between Kakao, Startups and small businesses will be the best way to lead the development of our industry and economy.

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