Online platform giants’ monopoly

Kakao tries to hide away, and Google does not even bother to pretend to be apologetic

After having been criticized for abusing market dominance, Kakao brought forward measures to cope with small businesses. Kakao announced that it will get out of businesses that are operated by small merchants and establish “mutual survival fund” of 300 billion won. Google, recently fined for practically forcing its operating software, also presented a plan yesterday to support Korea’s IT startups. Yet public reaction to these two internet superpowers is more of suspicion than of welcome, as their pledges were reluctant responses to condemnatory public opinion. In fact, Google is under fire for praising itself, let alone regret.

Kakao said it would withdraw from delivery platform business, spanning from flower, dessert, and salad to ride-hailing services. However, this is only a small portion of its portfolio, which the government takes aim at, fueling criticism that the platform giant is merely trying to appease the public opinion. Of the 158 affiliates, only a meagre few companies brought forward the measures to cope with small merchants and corner stores, and Kakao mentioned nothing with regard to its current practice of charging brokerage commission to small vendors, which is by far the biggest predicament.

Kim Beom-soo, also known as Brian Kim, the founder and chairman of Kakao, said that the company would abandon strategies that it had pursued over the past decade. Kakao abused its dominant position in platform markets to charge excessive brokerage fees to small businesses and expanded the number of affiliates by dozens every year. Not only is it difficult to overhaul the growth strategy with some stop gap measures, but Chairman Kim’s failure to disclose key information related to Kakao’s holding company and the resultant sanctions from the competent authority provide reasonable suspicion of Kakao’s genuine intention to transform itself.

As for Google, the company showed a complete disregard for the allegation that it abused its dominant position as an online platform, even after the passage of the bill to rein in Google from forcing app developers to use built-in payments systems and a heavy fine of 200 billion won. Rather, the company audaciously announced a plan to appeal the fine in the statement entitled “Google for Korea,” claiming that it accelerated innovation in Korea’s IT industry and created many jobs. The tech giant’s app store monopoly cannot be justified on the sole grounds of economic benefits.

Online platform giants have made an all-out effort to strengthen their monopoly, and they inexorably expanded its operations without regard to industry type and customer class so long as they can make money. Without fundamental reconsideration of the adverse effects of monopolistic dominance of these tech giants, their promise to fulfill social responsibilities and cope with small businesses is nothing more than an empty slogan. Kakao has set out to expand its operations to overseas, and Google vows to make more contribution to the Korean society. It won’t be long before we see whether they really mean it.