14, July, 2024
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| A passerby walks in front of a Kakao Friends store in downtown Seoul, South Korea. Yonhap News Agency |
Kakao and other IT service giants like Naver have cozied up to the South Korean regime like the Mafia's darling pets, and they've been wreaking havoc on small and medium-sized companies under the flimsy guise of shielding the domestic market from foreign threats. In reality, their true agenda was to siphon off Korean people’s hard-earned money.
This brazen chase for profit has finally come under legal scrutiny, shifting public perception as people realize just how subpar their services have become compared to international online platforms. Consequently, these Korean IT service companies now became more like organized crime syndicates.
Kakao's Controversies
Kakao has been swimming in a cesspool of controversies for years. This behemoth has been accused of trampling on small businesses in alleyways, engaging in shameless stock manipulation, and now faces a slew of legal troubles: one for allegedly rigging SM Entertainment's stock price, and another for potential accounting fraud at its subsidiary, Kakao Mobility (Camo). Oh, and let’s not forget their sneaky tactic of directing ride requests exclusively to their affiliated taxis.
SM Entertainment Stock Price Manipulation and Founder Kim Bum-soo
Kakao is in the hot seat for allegedly manipulating SM Entertainment's stock price. The star of this sordid show is former CEO Bae Jae-hyun, with prosecutors now setting their sights on founder Kim Bum-soo. Adding to the drama, Camo's accounting shenanigans are about to be judged by the Securities and Futures Commission. Should they deem it intentional fraud, expect the gavel to come down hard with prosecution.
Former CEO Bae Jae-hyun and Bryan(Kim Bum-soo)’s Role
Founder Kim Bum-soo was grilled by prosecutors for a grueling 20 hours recently. In February of last year, when Hive attempted to acquire SM Entertainment, Kakao swooped in and snapped up a huge chunk of shares. Prosecutors allege this was a deliberate move to block Hive’s tender offer. During the trial, juicy details emerged: transcripts of Bae Jae-hyun pleading for a 100 billion won stock purchase, allegedly greenlit by Kim Bum-soo himself.
Accounting Irregularities at Kakao Mobility
The fate of Camo's accounting scandal hangs in the balance, potentially decided as early as the 17th. Camo, which takes a 20% cut from taxi fares but kicks back 17% to the drivers, is suspected by the KFTC of inflating its revenue. If the KFTC’s allegations stick, Camo will be marched straight to the prosecutors.
Problems with Kakao
Kakao has racked up a litany of sins: bulldozing small businesses, engaging in stock fraud, and a catastrophic fire at the Pangyo data center that knocked out KakaoTalk. Their attempt at damage control? Hiring an outsider and trying to clean house, only to end up with internal squabbles and a public mudslinging fest on social media.
Conclusion
Kakao’s grand gesture of forming a Compliance and Trust Committee rings hollow against its mounting legal woes. Can this corporate titan genuinely morph into the "New Kakao" and sidestep its judicial pitfalls? The industry watches, skeptical and uneasy, as this saga unfolds.