Start-ups call for nixing of Kakao’s deal with taxis

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Start-ups call for nixing of Kakao’s deal with taxis

Carpool start-ups are taking issue with an agreement between Kakao Mobility and the local taxi industry signed just a week ago.

On Thursday, they requested a rescission of the deal. They argue that they shouldn’t have been left out of the discussions and that the solution devised puts them at a disadvantage and creates barriers to entry for smaller companies.

After talking for a month and a half, Kakao, government officials, lawmakers and representatives of the local taxi industry came to an agreement last Friday. Carpooling services will be allowed on weekdays 7 a.m. to 9 a.m. and 6 p.m. to 8 p.m. Weekends and holidays are to be excluded.

Democratic Party lawmaker Jeon Hyun-heui said Tuesday that she would make an effort to get the terms included in legislation this month.

Three carpool start-ups - Poolus, Wepool and Udigo - released a joint statement on Wednesday saying that Kakao does not represent all parties.

“The carpool industry cannot acknowledge the recent agreement,” they wrote. “We request a complete cancellation of the agreement and a new discussion that would give all players an equal chance.”

One concern they have is the operating times. Domestic transportation law currently permits carpooling for a fee for commuting purposes, but it does not define commuting hours. A Poolus spokesman explained that if the agreed limits are incorporated into law, this would create yet another regulation for the companies.

On Wednesday, Udigo introduced a carpool matching app available around the clock. The company’s CEO Moon Sung-hoon said in the press release that the start-up had not accepted the recent agreement and that the time limits were confined to Kakao.

They also object to a proposed taxi platform. After last Friday’s meeting, the signatories said they would work on launching an integrated platform for licensed taxi drivers and new carpool participants.

The smaller start-ups said the clause gives an advantage to Kakao, which is well capitalized and has a vast database of taxi information from its cab-hailing service.

“It may seem like Kakao backed off to reach a conclusion, but as a result, the company was practically ensured exclusivity to the carpool business,” the statement said. “The agreement was one made among privileged groups that could block the entrance of new service providers.”

The statement also expressed concern that such a barrier would block innovation and fair competition.

During a press conference on Tuesday, Lawmaker Jeon said she was aware of such concerns but explained the agreement was a “second-best solution to prevent the worst.”

“If the discussions fell apart, the taxi industry would have continued their protests, and based on the situation back then, the National Assembly would have passed bills that imposed strong regulations on carpools,” she said. “If the industry considered this background, they would have understood that this agreement was not a disadvantage to them.”

On Tuesday, a private cab driver taxi association in Seoul held a press conference to announce its refusal to accept the agreement, saying the document was signed without their consent.

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