After some controversies about negatively affecting the local economy in the process of business expansion, Kakao decided to pull some of its projects and establish a fund to support small business owners.
“The CEOs of Kakao’s key subsidiaries have decided to strengthen the group’s social responsibility at a plenary meeting,” said Kakao on Tuesday. The tech company decided to expand its business into areas that prosper innovation in IT and benefit users. The projects that caused controversies of negatively impacting local businesses will be withdrawn and relevant subsidiaries will be reorganized.
Kakao Mobility will discontinue its paid service ‘Smart Request,’ which was introduced to increase the likelihood of finding an available taxi. The company is also withdrawing its intermediary business in flower and snack delivery. For KakaoHairshop, a reservation platform for hair salons and nail shops, the company will sell its share owned by its subsidiary to pull out of the business.
In addition, Kakao has decided to support small business owners, taxi drivers, and chauffeurs for the next five years by establishing a fund of 300 billion won with its subsidiaries. K Cube Holdings, which caused a controversy of potentially violating the rule on the separation of industrial and financial capital, will shift its focus to creating social values, such as education for the future and talent development.
“The recent criticism is a strong warning against Kakao,” Kakao's Board of Directors Chairman Kim Beom-soo said in a statement. “Kakao needs to boldly discard the growth mechanism of the last 10 years and make fundamental changes to achieve growth with full social responsibility.”