South Korean internet giant Kakao — in the middle of multiple investigations over antitrust and securities violations — has appointed a new CEO as it tries to turn the ship around. Shina Chung, who had been running the company’s venture arm, is moving to the top role at the company.
Chung will officially step into the role next year following the company’s next board and shareholders’ meeting in March, according to the company. She will become the first female CEO at Kakao, and her appointment is intended to signal that the company is now in urgent reform mode.
“I will carry out active and responsible management” to meet the expectations and standards of society, Chung said in its statement. “I will not miss this opportunity for change because Kakao does not have much time.”
Kakao founder Beom-soo Kim had hinted that Kakao would be getting new leadership on Monday, at an internal meeting, noting, “Kakao has come to the point where we must try fundamental changes. We will establish leadership to lead a new Kakao.”
Image Credits: Kakao CEO nominee Shina Chung
Kakao, which operates a wildly popular superapp of the same name, leads the country in services like messaging and Uber-like transportation on demand. Yet its position at the top has come at a price.
In October, Kakao chief investment officer (CIO) Jae-Hyun Bae was arrested and accused of stock price manipulation after Kakao acquired K-pop agency SM Entertainment in August. If Kakao’s CIO and other execs get convicted, Kakao could be forced to sell at least 10% of its stake in its online banking unit, Kakao Bank, by the country’s financial regulator. South Korea’s current internet banking act has set down that non-financial companies should not have violated financial laws, the fair trade act or the tax offender penalty act over the past five years to hold more than 10 percent of voting rights in mobile-only banks like Kakao Bank.
Separately, just last month, South Korean President Yoon Suk Yeol called for a review of the monopolistic practices of Kakao’s taxi-hailing unit, Kakao Mobility. The claim is that the company is manipulating algorithms in its app to favor assigning rides to Kakao-franchised taxi drivers, who subscribe to Kakao’s paid membership, over non-Kakao taxi drivers.
Korea’s antitrust regulator had already fined Kakao Mobility about $20.3 million for unfair service in February. Kakao Mobility, which has about 74% of the ride-hailing market in the country as of September, separately is trying to lower the temperature around this controvery. Today it announced that it would lower commission fees from 5% to 2.8% for taxi drivers and that it plans to revise its membership scheme next year.
Founded in 1995 in Jeju, South Korea, Kakao — which started out as an internet search engine formally known as Daum — has now become South Korea’s super app, offering the country’s most popular messaging app, KakaoTalk, taxi-hailing service Kakao Mobility, online banking platform Kakao Bank, music streaming app Melon and webtoon platforms Tapas Media and Radish and more. It has conducted aggressive M&A deals in the past few years in South Korea and has global ambitions, too. Kakao has more than 140 subsidiaries as of October.
Chung — who worked at Boston Consulting Group, eBay Asia and Naver prior to joining Kakao Ventures in 2014 to invest in local startups — will have her work cut out for her.