Google buys 1.7% of Kakao Mobility as Uber venture threatens
Google has purchased 1.7 percent of Kakao Mobility in a strategic investment just as Uber forms a joint venture with T Map Mobility.
The 56.5-billion-won ($50 million) transaction, announced on Thursday, is not simply a financial arrangement, as Google and Kakao Mobility will work together to deploy the technology and services of the other, the companies said.
They only offered the vaguest details on the collaboration, saying that there will be "comprehensive cooperation on developing artificial intelligence technology using the cloud and on operating system software designed to enhance user experience."
Since its inception in 2017 as a spinoff from Kakao, the 69.3-percent-owned mobility subsidiary has secured several rounds of investment, but the fundings didn't involve specific partnerships or shared business goals.
The Carlyle Group made 220 billion-won investment in February, and a TPG Capital-led consortium was an early investor with 500 billion won.
"The latest funding marks the first strategic investment for Kakao Mobility," Lee Chang-min, Kakao Mobility's chief Financial officer at the company, said.
Kakao Mobility "will find new business opportunities and follow-up partnerships with companies at home and abroad based on the long-term cooperation," the CFO added in a statement.
Google technology might be used in Kakao T to improve its performance as the app faces strong competition in the market. Kakao Mobility said there is no current plan to use Google Maps, while Google declined to comment.
On the same day of the funding announcement, Uber formed a joint venture with T Map Mobility, a spinoff from SK Telecom.
UT, 51 percent owned by Uber following a $100 million investment, will combine the ride hailing services of Uber and T Map Taxi, a taxi assigning app from T Map Mobility, this summer.
Uber currently runs a franchise taxi service in Korea with a plan to supply 1,000 Uber-badged taxis in the first half.
Unlike Uber in many countries, the service hires licensed taxi drivers in accordance with local regulations while the rate is in line with regular taxis.
T Map dominates the market in the navigation sector, but trails Kakao Mobility when it comes to taxi-hailing services.
T Map Taxi had just 1.25 million monthly active users as of 2019, while Kakao T claimed 10 million the same year.
Uber has struggled in Korea due primarily to heavy regulations and objections from local taxi associations.
Tom White, formerly director of Uber Korea, will head the joint venture.
BY PARK EUN-JEE [email@example.com]