A FEW MONTHS ago Kim Beom-su looked like the face of responsible capitalism in South Korea. In March the billionaire founder of Kakao, which runs the country’s most successful messaging app and a slew of other digital services, promised to give away half his wealth for charitable causes, the second Korean tycoon to make that pledge. Now he is making headlines for some less salubrious reasons. Antitrust officials have reportedly set their sights on his private holding company for allegedly failing to report properly on its shareholders and affiliates.
The apparent move against Kakao’s founder is the latest salvo in an ongoing battle. Like their counterparts in America and China, South Korea’s technology giants have come under scrutiny. Officials worry that as firms such as Naver, which began life as a search engine, and Kakao have expanded into anything from ride-hailing to personal finance, they have picked up the bad habits of the chaebol. These sprawling conglomerates were instrumental in making South Korea rich and continue to dominate its economy. But they are notorious for murky governance structures, oligopolistic business practices and close ties with the political elite.
Over the past few weeks politicians have ramped up the rhetoric. “Kakao has turned from a symbol of growth and innovation into a symbol of old greed,” Song Young-gil, a leader of the ruling Minjoo party, told the National Assembly this month. “We will find a way to stop its rapid expansion and help it coexist with small-business owners,” he warned.
The same day regulators ruled that some financial services offered by Kakao and Naver violated consumer-protection laws because the platforms were not registered as intermediaries. The two companies will now be required to abide by brokerage regulations. Spooked investors dumped Kakao and Naver shares, shaving a tenth, or $11bn, off their combined stockmarket value.
Korean trustbusters, for their part, are investigating allegations that Kakao’s taxi-hailing service favours its own pricier cabs. They want e-commerce platforms to draw up proper contracts with third-party sellers, and specify what commissions they earn. In August Coupang, the country’s biggest e-commerce firm, was fined 3.3bn won ($2.8m) for pressing suppliers to lower prices. South Korea’s largely unregulated crypto-exchanges will have to register as legal trading platforms.
The techlash is not limited to domestic tech darlings. On September 14th regulators fined Google $177m for not allowing versions of its Android operating system to be installed on locally made smartphones. And last month South Korea became the first country to oblige Apple and Google to accept alternative payments systems in their app stores.
App developers like Epic Games, which suffered a courtroom defeat against Apple in America on September 10th, welcomed the move. The…
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