South Korea's antitrust watchdog, the Korea Fair Trade Commission (KTFC), has fined Kakao Mobility, the ride-hailing unit of Korean tech firm Kakao, $10.5 million (KRW 15.1 billion) for limiting competitors' access to its taxi app. The fine was reduced from an initial penalty of $50.3 million (KRW 72.4 billion) due to an overestimated calculation of the company's operating profits.

The KTFC investigation found that Kakao Mobility had demanded franchise competitors, such as Banban, Macaron Taxi, TADA, and Uber Taxi, either pay a fee for their drivers' access to the Kakao T app or sign partnership agreements allowing Kakao Mobility to collect their operational data, including sensitive business information such as driver details. If they refused, franchise drivers who use Kakao's platform would be blocked from using the Kakao T app.

This move by Kakao Mobility effectively limited competitors' access to its platform, which holds a dominant 96% market share in the country's taxi-hailing market as of 2022. The company's market dominance was further cemented by partnerships with Banban and Macaron Taxi, which helped Kakao Mobility grow its market share from 51% in 2020 to 79% in 2022.

In response to the fine, a spokesperson for Kakao Mobility claimed that blocking franchise taxis from accessing calls on the Kakao T app was done to minimize call duplication between platforms and enhance user convenience. The company also stated that it is fully committed to supporting the government's initiatives to promote fair competition within the platform industry while pursuing administrative litigation to demonstrate that no legal violations occurred.

This is not the first time Kakao Mobility has faced regulatory issues. In November, the Financial Services Commission fined the company $2.47 million (KRW 3.4 billion) for suspected accounting fraud, referring the case to the prosecutor for further investigation.

Kakao's chairman and founder, Brian Kim, was also granted bail in October after 100 days of arrest for alleged involvement in stock manipulation. The company reported an improved operating profit for the third quarter of this year, but concerns remain as the improvement came without sales growth. Furthermore, the company's new chat-based AI service, Kanana, which aims to launch a closed beta service next year, is receiving a mediocre market response due to its limited data allocation.

The fine and regulatory issues surrounding Kakao Mobility highlight the importance of promoting fair competition in the platform industry. As the company continues to dominate the taxi-hailing market in South Korea, it remains to be seen how the regulatory environment will impact its business operations and growth prospects.

In conclusion, the fine imposed on Kakao Mobility serves as a reminder of the need for companies to prioritize fair competition and transparency in their business practices. As the platform industry continues to evolve, regulatory bodies must remain vigilant in ensuring that companies do not abuse their market dominance to stifle competition.