Fixing unfair restrictionsLeading mobile messenger operator Kakao is now considered a “large business group,” becoming the nation’s first Internet start-up to join the category traditionally dominated by family-run conglomerates. To join the rank, a company has to have assets over 5 trillion won ($4.35 billion). In exchange, it falls under stricter antitrust regulations from the Fair Trade Commission.
Kim Beom-su, the company’s cofounder and chairman, should be credited for the company’s staggering success. Four years after starting the company, he launched the easily accessible messenger platform KakaoTalk. It took off, and further expanded through features like KakaoStory and KakaoGame.
In 2014, it merged with Daum, the country’s second-largest Internet portal, and went on to acquire Loc&All, which runs the popular navigation app Kimgisa, as well as Loen Entertainment, operator of the country’s top music streaming service MelOn. By the end of last year, the company had 45 affiliates under its umbrella.
Kakao’s new status as a large business group is an achievement for a start-up, but it’s also a burden.
It now faces the same 35 additional regulations faced by companies like Samsung, Hyundai, LG and SK. It will be restricted in cross-affiliate investment, debt guarantees or work placements with its sister companies. Its launch of the Internet-only KakaoBank, slated for the second half of the year, may be the first affected. Kakao can hardly retain its large shareholder’s position under the law that prohibits industrial companies from owning a bank.
Regulations for large companies should change with the times. Collaboration and convergence of brick-and-mortar and online businesses now form the mainstream in the global economy. Rules and regulations made to serve the traditional manufacturing sector cannot accommodate new and emergent industries. Large corporate categories should be differentiated and segmented by industry and sector.
The 5 trillion won standard also must be reexamined. The rule mostly works to stifle companies at the bottom rather than the ones at the top. Kakao, with its 5.1 trillion won in assets, would face the same set of restrictions as Samsung Electronics, which has over 348 trillion won in assets. Authorities must pay heed to the demand from the business sector to lift the threshold to 10 trillion won.
JoongAng Ilbo, Apr. 4, Page 30