In the midst of several investigations regarding antitrust and securities violations, the South Korean internet giant, Kakao, has taken a significant step by naming Shina Chung as its new CEO. Chung, previously overseeing the company’s venture arm, is set to assume the top position next year, following the upcoming board and shareholders’ meeting scheduled for March, as indicated by the company. This move is not only a leadership change but also signifies a pressing need for reform within the company.
Chung’s appointment is notable, marking her as the first female CEO at Kakao. In her statement, she expressed a commitment to “active and responsible management” aimed at meeting societal expectations and standards. She emphasized the urgency for change, acknowledging that Kakao is running out of time.
The founder of Kakao, Beom-soo Kim, had hinted at the need for new leadership during an internal meeting on Monday. Kim stated, “Kakao has reached a point where fundamental changes are imperative. We are poised to establish leadership that will guide a transformed Kakao.”
Kakao, renowned for its superapp offering various services, including messaging and Uber-like transportation on demand, has faced challenges despite its market dominance. In October, the Chief Investment Officer (CIO) Jae-Hyun Bae was arrested, accused of stock price manipulation after Kakao’s acquisition of K-pop agency SM Entertainment in August. Convictions of Kakao’s CIO and other executives could compel the company to sell at least 10% of its stake in the online banking unit, Kakao Bank, per the country’s financial regulations.
Adding to the complexity, South Korean President Yoon Suk Yeol recently called for a review of Kakao Mobility, the company’s taxi-hailing unit, citing monopolistic practices. Allegations include the manipulation of algorithms in favor of Kakao-franchised taxi drivers who subscribe to Kakao’s paid membership over non-Kakao taxi drivers.
Korea’s antitrust regulator had previously fined Kakao Mobility approximately $20.3 million for unfair service in February. Attempting to address the controversy, Kakao Mobility announced a reduction in commission fees from 5% to 2.8% for taxi drivers and plans to revise its membership scheme next year.
Established in 1995 in Jeju, South Korea, Kakao, originally an internet search engine known as Daum, has evolved into South Korea’s super app. Offering the 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, Kakao has undergone aggressive M&A deals and harbors global ambitions with over 140 subsidiaries as of October.
Shina Chung, with prior experience at Boston Consulting Group, eBay Asia, and Naver before joining Kakao Ventures in 2014, faces a challenging task in her new role.