Uber Expands Its Presence in South Korea to Compete with Kakao Mobility

Following significant growth in South Korea, Uber Technologies is intensifying its efforts within the country by declaring a robust strategy to compete directly with Kakao Mobility, the lead ride-hailing entity predominantly owned by the South Korean tech powerhouse, Kakao.

During a press briefing in Seoul, Dara Khosrowshahi, the CEO of Uber, revealed the company’s strategy and initiated a drive to augment the network of Uber drivers in South Korea.

Achieving this goal will require substantial initiative. Kakao Mobility’s Kakao Taxi service, heralding over 23 million users and commanding a 98% share in the market, currently stands as the colossus of Korea’s ride-hailing sector, according to Statista.

Khosrowshahi also shared Uber’s intention to enhance collaborations with automotive technology firms in Korea, mirroring the company’s strategy in other territories.

Uber has been notably proactive in forging such partnerships of late. For instance, just last week, Cruise—a subsidiary of General Motors dedicated to autonomous driving—entered into a long-term agreement with Uber to integrate its robotaxis onto Uber’s platform by 2025. Furthermore, Uber has recently invested in Wayve, a UK-based enterprise focusing on autonomous driving technologies. Not to mention Uber’s ongoing collaboration with Hyundai Motors in markets like Europe.

Uber’s escalation of activities in South Korea signals a new saga in the dynamic narrative of the country’s ride-hailing arena.

While Uber has globally earned a reputation for its confrontations with regulatory bodies, in South Korea, the domestic giant Kakao Mobility has recently been more in the limelight for regulatory scrutiny.

The national Fair Trade Commission imposed a $20 million penalty on Kakao Mobility in February 2023 for manipulating its algorithm to prioritize its own taxis, without however, pursuing legal charges at that time.

Yet, in the preceding December, South Korean authorities urged the antitrust regulator to officially charge Kakao Mobility for its algorithmic manipulation that unduly favored its taxis, a reiteration of February’s incident. (To note, Kakao’s application accommodates both franchise and non-franchise taxis for ride requisitions, with franchise taxis often getting prioritized regardless of proximity.)

Uber, too, has navigated through its share of controversies in South Korea.

Uber commenced operations in South Korea ten years prior, which led to widespread protests from local taxi drivers who viewed the service as a threat. Following these protests, Seoul’s authorities contemplated banning the service by the end of 2013.

Nevertheless, Uber persisted in the market. In 2020, it formed a strategic joint venture with TMAP Mobility, a ride-hailing division of SK Telecom, marking its re-entry into the South Korean market. This partnership, known as UT, unveiled its taxi-hailing service the subsequent year and was rebranded to Uber Taxi as of this March.

Though considered a smaller contender, possibly capturing less than 10% of the market alongside other emerging players, Uber is experiencing notable growth in South Korea. This week, the company reported nearly an 80% surge in passenger counts in the first half of 2024 compared to the previous year, with international traveler usage also seeing substantial increases following the rebranding.