Kakao T, cool, practical and the target of criticism

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A passenger gets into a Kakao Blue taxi. [KAKAO MOBILITY]

With the growing popularity of the Kakao T taxi call app, Kakao Mobility faces accusations of abuse of its dominant position in the market.

The company says it is innocent of all charges, that the charges are mostly the result of people not understanding how the system works.

Kakao Mobility, which runs Kakao T and is controlled by Kakao, has an 80 percent of the taxi market and is expanding its application to cover a wider range of services – electric bicycle rental, booking train, plane and bus tickets. bus and package delivery registration.

The strategy is as simple as it is deceptive, critics say: lure users and drivers in with free services, then add some very attractive premium paid features. Despite the additional fees, service providers and users cannot abandon the app due to its market dominance.

The company launched the Kakao T Pro membership in March, a paid membership that gives taxi drivers a better chance of getting ride requests. Large numbers of drivers rushed to sign up for fear of missing out on benefits and losing competitiveness, and many complained that paid service would now become a requirement.

The premium service costs 99,000 won ($ 86) per month. It notifies drivers of areas where there are large numbers of people hailing taxis, a feature that was once provided free of charge, and allows drivers to receive ride requests to the areas they want.

The anger came to a head when Kakao Mobility announced that it will be able to cancel Pro membership for lower-rated taxi drivers starting Thursday.

“Service providers and workers must be the main business group, but now it has become a special situation where the platform has influence,” said Lee Yang-deok, director of the Korean National Joint Conference. of the Taxi Association.

Kakao Mobility says the change is about improving the quality of service for its taxi drivers. While low-rated drivers can be waived, high-rated drivers will receive benefits.

“We will provide additional benefits to taxi drivers who provide high quality service,” said a spokesperson for Kakao Mobility.

Another complaint was that Kakao T’s ride allocation system prioritizes premium taxi services over regular taxis. On the app, Black, Blue, and Smart Call taxis – types that charge users additional fees – are displayed at the top, while the option to call a regular taxi is at the bottom of the list.

The app has also been accused of matching Kakao Blue taxis – taxis registered under Kakao Mobility’s subsidiary KM Solutions – even though users specifically request other trips. Following the accusation, the Korea Federal Trade Commission (KFTC) opened an investigation into Kakao Mobility’s taxi calling services last year and is currently investigating whether the company has prioritized drivers. Kakao Blue during the awarding of races.

“There are cases where the app says it is trying to find a matching taxi even though there are a lot of empty normal taxis nearby,” said a CEO of one of the mobility start-ups . “Users can choose which type of taxi they want to take, but the service basically recommends premium taxi rides. ”

According to the company, holding premium services at the top of the app display is to provide faster and better service to users.

“Quickly connecting users to vehicles is our top priority, and we list the types of taxis in the order that there is a greater possibility for users to be matched,” said the spokesperson for Kakao Mobility. . “Normal taxi drivers can choose to accept or decline the ride request, and premium services will be more likely to be associated with users because they won’t be able to deny ride requests once assigned. ”

For cases where a distant Kakao Blue taxi was assigned instead of a closer normal taxi, the company said that the drivers’ memos could have been the reason.

“Even if there is a taxi nearby, this driver could have a history of declining ride requests or have low grades – these exceptions seemed to cause misunderstanding,” the spokesperson said. “Intervening in the taxi reservation system would reduce the efficiency of our system, and there is no reason why we should.”

Kakao T received 516 billion won investment this year from Google, Carlyle Group, LG Corp. and others. While other taxi companies reported declining revenues last year, subsidiaries of Kakao Mobility, which includes KM Solutions, reported revenues of $ 890 billion, an increase of 1,208% from to the previous year. The company plans to further expand its services.

“It is very likely that [Kakao Mobility’s] parcel and express delivery, car wash and maintenance booking service and more will follow, ”said a spokesperson working for a local taxi company, indicating that the company will also add additional paid features to other services.

BY MIN-JE PARK, LEE TAE-HEE [[email protected]]

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