Market Monopoly
The Korea Fair Trade Commission (FTC) has launched an investigation into allegations of unfair business practices by Kakao.
According to industry sources on August 28, the country’s anti-trust regulator is investigating the fact that Kakao unilaterally terminated its contract with mobile coupon providers.
SK Planet started its mobile gift card business in 2007, and signed a contract with Kakao in 2011. However, the mobile SNS service provider informed several mobile coupon providers, including SK Planet, that it will terminate its contract with them, stemming from the initiation of its own mobile coupon service in June.
In response, those mobile gift card companies reported Kakao to the FTC for unfair business practices using its market dominance.
Currently, monthly users of mobile messaging platform KakaoTalk have reach 35 million, and the maximum amount of message transmission amounts to 7.1 billion per day. The size of Kakao's mobile coupon service stood at 260 billion won (US$256 million) last year.
Some in the industry raised the possibility that the regulatory authority will launch another investigation of any wrongdoings in the merger between Kakao and Daum Communications, which was finalized on August 27.
An industry source remarked, “Some say that civic groups are likely to report the M&A deal to the FTC.” An official at the FTC said, “Once reported, we will begin to investigate the deal.”
The market cap of Daum-Kakao, scheduled to be officially launched on October 1, is expected to approach 10 trillion won (US$9.8 billion). Once the investigation begins, it is likely to deeply affect the industry.