(Bloomberg) — Kakao Corp. pledged 300 billion won ($256 million) to help smaller merchants and promised to get out of businesses that compete with mom-and-pop shops, responding to criticism from lawmakers about how Korea’s social media leader has evolved into “a symbol of greed.”
The internet giant and its main subsidiaries will establish the fund over the next five years while it begins to exit certain businesses, Kakao said in a statement Tuesday. It will expand its overseas footprint, including in North America, Southeast Asia and Japan. Kakao, which was down as much as 5.2% Tuesday, recouped all losses in late trading in Seoul.
South Korea has been making moves to rein in foreign and local tech firms, mirroring a months-long crackdown in China that’s erased more than $1 trillion in value off China’s largest corporations. As in Beijing, regulators and politicians in Seoul have expressed concerns about the growing power and valuations of internet firms like Kakao, Naver Corp. and Coupang Inc. after the pandemic spurred an unprecedented surge in internet activity.
This month, South Korean lawmakers warned the nation’s internet giants against abusing their market dominance in the pursuit of profits. Kakao should not follow the path of the country’s sprawling “chaebol” conglomerates in ignoring fair competition, Song Young-gil, head of the ruling Democratic Party, told a forum hosted by fellow lawmakers, Yonhap reported.
“The recent criticism is a powerful alarm bell for Kakao,” founder Brian Kim said in the statement. “We’re at a point where Kakao and its units will need to seek fundamental changes for growth that will fulfill social responsibilities by abandoning strategies that we have pursued over the past decade.”
Read more: Internet Giants Take Fire in Korean Echo of China Crackdown
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