South Korea continues to curb tech firms’ dominance in the industry with restrictions being imposed. Kakao Corp, the country’s largest online messaging and social media service business, is the latest one on the list.
Naver Corp and Kakao Corp, the two market giants, have received a lot of criticism which followed by both firms losing $10.3 billion in market cap. On Wednesday, the market opened with a steep drop in Kakao’s shares by 10.06%, roughly $6 Billion. The capital mishap took place on a single trading day which is alarming for the company. The company attempted to expand and diversify its market presence into areas designated for local business.
In a meeting held in the National Assembly, civic organizations debated the growing concerns of the company’s widespread dominance in the market. The aggressive expansion strategies led the assembly to plan measures in the interest of local ventures and consumers.
“While the platforms operating such services argue that they were doing so for advertising purposes, we reviewed that the services fall under the domain of financial brokerages, which require registration,” said the financial regulators.
Kakao parented 45 divisions in 2015 which rapidly grew to 118 in not more than seven years. With this, they almost topped the largest conglomerates in the country after SK Group leading the position. The industries they indulge in include banking, mobility, entertainment and education.
Although business expansion is considered a growth measure, the huge union of the Kakao family now dominates the market, which has caught the attention of public and civic organizations.
Kakao and Naver gained a huge advantage in the country’s quarantined phase in South Korea, creating an at-home trend. The company ripped profits, going around 78% up in that past year. The company emerged as one of the strongest conglomerates with the help of Kakao Games Corp, Kakao Bank Corp and Naver.
The post-pandemic market steered an enormous surge in internet activity. Both Chinese and Korean regulators have shown concerns about the growing supremacy of tech giants like Kakao, Naver, and Coupans Inc. Industry experts review the moves of the Korean regulatory system. According to them, South Korea is now emerging as another China while handling market dominance by tech giants. The company’s size is compared to the long-established market giants such as LG Group, Hyundai Motor Group and Samsung.
While commenting on the topic, Song Young-gil, the DPK leader, said, “Kakao must not follow the steps of the country’s other conglomerates that ignored fairness and coexistence in the sole pursuit of profit.”
There’s still a debate over regulators’ interpretation of the dominant existence of tech firms in the country. As a result, industry experts demand a properly framed set of regulations to curb growing powers and protect small businesses.