Kakao Faces Heightened Regulatory Challenges as South Korean Political Pressure Grows, According to Metaverse Post

South Korean tech conglomerate Kakao , known for its infamous chat app KakaoTalk This tech powerhouse, which takes over 90% of South Korea’s taxi app market and has an extensive range of services, is under renewed examination by President Yoon Suk Yeol, who has expressed concerns over potential monopolistic behavior in the taxi service sector.

This situation compounds the difficulties the firm is experiencing after a probe into its stock activities. market manipulation .

Reports indicate that Kakao Corp's stock value has decreased by 27% in the last three months, reflecting rising worries about regulatory issues that may affect the company's market worth.

As Kakao strives to push forward with its artificial intelligence projects and infrastructure investments to stay competitive with its domestic rivals, these challenges might get more severe, leading to significant disruptions. Naver With Kakao’s challenges now broadening out, and given its significant market presence, analysts suggest it will likely attract heightened scrutiny from the public, especially with general elections approaching in April.

The South Korean President's Perspective on Kakao's Market Manipulation

At a public conference on Wednesday, President Yoon Suk Yeol criticized Kakao's taxi-hailing service as monopolistic, asserting the need for an immediate review. Kakao Mobility \"Given that they drew in drivers and subsequently increased prices, it’s quite unethical, and the government should intervene,” stated President Yoon in response to a taxi driver's complaint regarding market abuse.

With over 90% market share in the South Korean taxi-hailing industry, Kakao Mobility has arranged an emergency meeting with taxi drivers to discuss altering their fee structure amidst growing public concern. The company faced public backlash a year ago following a significant outage of KakaoTalk, which raised questions about its overwhelming market dominance and the reliance of consumers and businesses on its services.

The regulatory environment became more complicated last month after concerns were raised regarding potential stock market manipulation connected to Kakao's acquisition of the K-Pop agency, SM Entertainment. The Financial Supervisory Service (FSS) expressed its intent to refer Kakao, its affiliate Kakao Entertainment, and implicated executives to public prosecutors over suspected breaches of the Capital Markets Act.

Should any wrongdoing at Kakao Corp be established, the company could be required to divest part of its significant 27.2% ownership in an online banking entity, which would legally prevent it from maintaining its position as a primary shareholder. Additionally, the National Pension Service (NPS), which is state-run, has shifted from a passive investment approach in Kakao to a more active exercise of its shareholder rights. arrest of one of Kakao’s executives Kakao's resources are currently stretched across numerous legal challenges and investigations being conducted by prosecution and financial regulatory bodies.

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