SEOUL: South Korean tech large Kakao faces rising regulatory warmth after the nation’s president urged a assessment into its taxi app amid complaints about monopolistic practices, which comes on the heels of a probe into suspected inventory market manipulation.
Shares in Kakao Corp, which operates Korea’s dominant chat app KakaoTalk and has expanded into digital banking, taxi companies and leisure, have dropped 27% over the previous three months, undershooting a ten.5% fall within the broader market and reflecting rising regulatory issues.
Analysts warn these troubles may worsen for the group, creating undesirable distractions simply because the agency seeks to push ahead on synthetic intelligence and infrastructure funding to compete with native rival Naver Corp.
“Kakao’s points seem to politicised past their important actuality,” mentioned Park Ju-gun, head of company evaluation agency Leaders Index.
“Its dominance within the nation make it a helpful topic to attract the general public’s consideration with earlier than normal elections subsequent April.”
South Korean President Yoon Suk Yeol informed a public assembly on Wednesday that the market behaviour of Kakao Mobility’s taxi-hailing service was monopolistic and required a assessment.
“Within the sense that they attracted (drivers) after which raised costs, it’s totally immoral and the federal government ought to take motion,” he mentioned in response to a grievance raised by a taxi driver over what he mentioned had been market abusing follow.
The president’s workplace didn’t elaborate on additional motion when requested by Reuters for remark. Kakao declined remark for the story.
Kakao Mobility, which holds greater than 90% market share of South Korea‘s taxi-hailing market, mentioned late Wednesday it could maintain an emergency assembly with taxi drivers to reform the price system.
Public issues concerning the group emerged a yr in the past when a widespread outage of KakaoTalk raised questions concerning the cell chat app’s big market dominance and simply how reliant shoppers and companies had been on its associated companies.
Its regulatory troubles escalated final month when one in all its executives was arrested for suspected inventory market manipulation throughout its acquisition of Ok-Pop company SM Leisure.
Final week, regulator Monetary Supervisory Service (FSS) mentioned it’s going to refer Kakao, its affiliate Kakao Leisure and executives concerned within the SM Leisure acquisition to public prosecutors for suspected violation of the Capital Markets Act.
If a court docket finds wrongdoing at Kakao Corp, the group may very well be compelled to divest a part of its 27.2% stake in on-line financial institution KakaoBank, as it could not be legally allowed to stay the financial institution’s main shareholder, based on authorized specialists.
Including to these issues, state-run Nationwide Pension Service (NPS) mentioned on Wednesday it modified the aim of its funding in Kakao to at least one that entails extra energetic train of shareholder rights from passive funding beforehand.
NPS declined to reveal particular causes for altering its funding goal. It held a 5.4% stake in Kakao, based on the newest disclosure.
“Kakao’s assets are at present being divided alongside varied authorized proceedings and probes by the prosecution, monetary regulator,” Samsung Securities analyst Oh Dong-hwan wrote in a notice.
“It’s needed to concentrate to authorized dangers, as issues could come up within the standing of KakaoBank relying on the probes’ outcomes.”
Shares in Kakao Corp, which operates Korea’s dominant chat app KakaoTalk and has expanded into digital banking, taxi companies and leisure, have dropped 27% over the previous three months, undershooting a ten.5% fall within the broader market and reflecting rising regulatory issues.
Analysts warn these troubles may worsen for the group, creating undesirable distractions simply because the agency seeks to push ahead on synthetic intelligence and infrastructure funding to compete with native rival Naver Corp.
“Kakao’s points seem to politicised past their important actuality,” mentioned Park Ju-gun, head of company evaluation agency Leaders Index.
“Its dominance within the nation make it a helpful topic to attract the general public’s consideration with earlier than normal elections subsequent April.”
South Korean President Yoon Suk Yeol informed a public assembly on Wednesday that the market behaviour of Kakao Mobility’s taxi-hailing service was monopolistic and required a assessment.
“Within the sense that they attracted (drivers) after which raised costs, it’s totally immoral and the federal government ought to take motion,” he mentioned in response to a grievance raised by a taxi driver over what he mentioned had been market abusing follow.
The president’s workplace didn’t elaborate on additional motion when requested by Reuters for remark. Kakao declined remark for the story.
Kakao Mobility, which holds greater than 90% market share of South Korea‘s taxi-hailing market, mentioned late Wednesday it could maintain an emergency assembly with taxi drivers to reform the price system.
Public issues concerning the group emerged a yr in the past when a widespread outage of KakaoTalk raised questions concerning the cell chat app’s big market dominance and simply how reliant shoppers and companies had been on its associated companies.
Its regulatory troubles escalated final month when one in all its executives was arrested for suspected inventory market manipulation throughout its acquisition of Ok-Pop company SM Leisure.
Final week, regulator Monetary Supervisory Service (FSS) mentioned it’s going to refer Kakao, its affiliate Kakao Leisure and executives concerned within the SM Leisure acquisition to public prosecutors for suspected violation of the Capital Markets Act.
If a court docket finds wrongdoing at Kakao Corp, the group may very well be compelled to divest a part of its 27.2% stake in on-line financial institution KakaoBank, as it could not be legally allowed to stay the financial institution’s main shareholder, based on authorized specialists.
Including to these issues, state-run Nationwide Pension Service (NPS) mentioned on Wednesday it modified the aim of its funding in Kakao to at least one that entails extra energetic train of shareholder rights from passive funding beforehand.
NPS declined to reveal particular causes for altering its funding goal. It held a 5.4% stake in Kakao, based on the newest disclosure.
“Kakao’s assets are at present being divided alongside varied authorized proceedings and probes by the prosecution, monetary regulator,” Samsung Securities analyst Oh Dong-hwan wrote in a notice.
“It’s needed to concentrate to authorized dangers, as issues could come up within the standing of KakaoBank relying on the probes’ outcomes.”
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