Kakao Mobility's Fine Overturned by Court

The Seoul High Court has ruled in favor of Kakao Mobility, canceling the 27.1 billion KRW fine imposed by the Fair Trade Commission (FTC) over allegations of 'call manipulation.' On May 22, the court's Administrative Division 7, led by Judge Koo Hoe-geun, annulled both the fine and the corrective order issued by the FTC, stating that the commission must also bear the legal costs of the case.

Kakao Mobility faced accusations of manipulating its algorithm to favor its franchise taxi service, Kakao T Blue, which was launched in 2019. This service recruits both corporate taxi companies and individual drivers as franchisees, charging a franchise fee while providing passenger call and dispatch services through the Kakao Taxi app.

In February 2023, the FTC deemed Kakao Mobility's actions a violation of franchise business laws, leading to the hefty fine and a corrective order. Kakao Mobility contested this, arguing that their algorithm was based on the acceptance rates of taxi drivers.

As a quasi-judicial body, the FTC has the authority to impose fines on companies violating fair trade laws, and its decisions can be appealed directly to the Seoul High Court, effectively serving as the first instance of judicial review.

Following the ruling, Kakao Mobility stated that the acceptance rate of dispatches had been utilized in their Kakao T dispatch logic even before the introduction of franchise taxis, emphasizing that the court's decision confirmed their commitment to enhancing benefits for both passengers and drivers without discrimination between franchise and non-franchise drivers.

Additionally, the FTC had previously fined Kakao Mobility 15.1 billion KRW in September 2022 for allegedly blocking general calls to a competitor's franchise taxis. Kakao Mobility is currently contesting this fine as well.

The prosecution is also investigating various allegations surrounding Kakao Mobility. In March, they conducted searches at the Kakao headquarters in Pangyo and the offices of Kakao Mobility related to suspicions of inflating revenue figures. The Financial Services Commission's Securities and Futures Commission had previously imposed a fine of approximately 3.5 billion KRW on Kakao Mobility in November for overstating operating revenue and expenses.