South Korea’s Ministry of Land, Infrastructure, and Transport (MOLIT) is contemplating diversifying its taxi platform landscape due to the dominance of Kakao Mobility in the taxi market. Kakao Mobility, through its taxi service KakaoT, has a significant hold on the market, prompting the need for a more varied operator base.
The government is crafting policies to dismantle the current taxi service monopolies and broaden the market scope. Given the challenges in breaking Kakao’s monopoly within a market heavily reliant on hailing services, the strategy involves introducing specialized platforms catering to different needs, such as taxis for courteous service, those equipped for disabled individuals, and those suitable for older people. Concurrently, there is an initiative to tighten regulations concerning platform-based taxi services.
As of Feb. 7, MOLIT disclosed that efforts are underway to restructure the taxi platform sector, focusing on diversification and service expansion, propelled by directives from the ministry. Park Sang-woo, the Minister of MOLIT, reportedly urged industry practitioners to “Find a contender for Kakao Mobility” during a recent briefing, echoing President Yoon Suk-yeol’s earlier criticisms of Kakao Mobility’s monopolization practices.
The push for change is also influenced by scrutiny from the Federal Trade Commission (FTC), which has been critical of Kakao Mobility’s practices. Previously, the FTC imposed a fine of approximately $20.38 million (2.7 billion won) on Kakao Mobility for preferential treatment in passenger pickups by its affiliated service, Kakao T Blue.
However, the government’s approach aims not merely to pressure Kakao Mobility but also to expand the taxi-hailing market. A MOLIT representative said, “Our goal is to diminish Kakao Mobility’s market dominance by enlarging the taxi market itself.” This strategy acknowledges the difficulty of directly competing with Kakao Mobility by offering identical services.
Indeed, attempts to rival Kakao by mirroring its ride-hailing platform have proven futile. UT, a joint venture backed by Uber and TMAP Mobility, has become the second-largest player in the market yet still holds a marginal market share in the single digits.
The government is looking to nurture sectors untouched by Kakao Mobility. This includes the possibility of launching a niche taxi platform focusing on destinations less favored by drivers or broadening the platform to incorporate ceremonial taxis and services tailored for the disabled and elderly.
