Kakao's upcoming second-quarter earnings report is drawing attention as it is expected to reflect a decline in mobility business revenue. This drop follows the implementation of a law in May that prohibits franchise fees from idle taxi operations, impacting Kakao Mobility's earnings while the company seeks to expand into new business areas.
According to industry sources, the revised Passenger Transport Business Act took effect on May 11, preventing platform franchise operators from collecting fees on fares generated from idle taxi operations. Previously, franchise taxis like Kakao T Blue paid a certain fee to the platform even when picking up passengers off the street, but this fee is no longer applicable under the new law.
Kakao Mobility is included in the 'Other Platform' segment of Kakao's consolidated financial results. In the first quarter of this year, revenue from this segment was approximately 50.9 billion won, a 30% increase compared to the same period last year, but a decrease from the previous quarter's 52.8 billion won. Analysts believe that the second-quarter results will provide the first insights into how the ban on idle taxi fees has affected the profitability of the mobility business.
Market estimates suggest that idle taxi operations accounted for 15% to 20% of the previous franchise fees, amounting to about 30 billion won annually.
A Kakao Mobility official stated, "Some financial impact is inevitable due to changes in the revenue structure of the franchise business. We plan to diversify our business portfolio to ensure the platform's sustainability."
Experts analyze that this regulation could change the revenue structure of the domestic mobility platform industry beyond just affecting specific companies. Kim Dong-young, a researcher at the Korea Development Institute (KDI), noted, "The ban on idle taxi fees will be a significant blow to platforms. More importantly, if even the dominant player in the taxi platform market struggles to generate stable profits, it may weaken the incentive for new entrants to join the market." He added, "If market competition decreases, there is also a possibility that service innovation will be stifled."
Concerns have been raised that if drivers prefer idle taxi operations, which do not incur fees, over platform calls, waiting times for platform calls could increase. This could lead to a further decline in platform calls following the revenue drop.
Kakao Mobility is accelerating efforts to reduce its reliance on the taxi business. In its first-quarter earnings announcement, the company explained that it is expanding its operations beyond the taxi platform to include parking and last-mile logistics. Recently, it has also been nurturing new businesses such as physical AI. However, these new revenue sources have yet to be reflected in its financial results, making the search for new income streams urgent.
An industry insider remarked, "For domestic taxi platforms, franchise fees from drivers have been a key revenue source, but with the elimination of idle taxi fees, it has become difficult to maintain the existing business structure. Finding new revenue sources beyond taxis has become unavoidable."
* This article has been translated by AI.
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