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South Korea’s dominant ride-hailing operator, Kakao Mobility Corp., will discontinue its flagship franchise taxi service, following years of regulatory friction over inflated revenues.
According to the mobility industry on Monday, Kakao Mobility halted new driver recruitment for Kakao T Blue earlier this year.
Kakao T Blue was Kakao’s first-generation franchise taxi service, operated through subsidiaries such as KM Solution. The taxis featured illuminated Kakao T signs and vehicle wraps with Kakao characters.
Its replacement, Nemo Taxi, is a new franchise model introduced in 2024 through discussions with the taxi industry as part of a coexistence initiative. Drivers pay an effective commission rate of 2.8 percent, lower than the 3-5 percent charged under Kakao T Blue, and operations are managed through regional franchise headquarters.
Once the transition is complete, all standard franchise taxis – except premium Venti large taxis and luxury Black taxis – are expected to operate as Nemo Taxis without the Kakao T logo.
The company’s decision to phase out Kakao T Blue appears to be aimed at simplifying its tax-platform business model while focusing resources on new businesses such as autonomous driving.
As Kakao aggressively expanded its taxi services at the group level in the past, the number of Kakao T franchise taxis surged from 1,507 vehicles in 2019 to 61,715 as of May 2024. Kakao Mobility’s revenue also increased from 104.8 billion won in 2019 to 739.3 billion won last year.
Kakao T Blue also became a major source of legal risk for the company.
Kakao Mobility operated the service by first collecting roughly 20 percent franchise fees from affiliated taxis, then returning about 15-17 percent under the label of business partnership fees.
This led to allegations of revenue inflation, and in 2024 financial regulators concluded that the practice violated accounting standards, imposing severe sanctions. The company also faced accusations that it prioritized ride requests for its own affiliated taxis during dispatching.
Although prosecutors dismissed the preferential dispatch allegations earlier this year, significantly easing Kakao Mobility’s judicial risks, the controversy nevertheless highlighted the risks inherent in the franchise taxi business.
Kakao Mobility decided to eliminate its higher-risk legacy franchise products and instead concentrate on Nemo Taxi, a new model emphasizing cooperation with local taxi companies.
Unlike Kakao T Blue, which was centrally managed by Kakao Mobility and its subsidiaries, Nemo Taxi is operated directly by regional franchise headquarters. Local operators oversee offline service quality, while Kakao Mobility provides taxi-platform technologies such as dispatch solutions.
Through this transition, Kakao Mobility aims to reduce operational burdens and risks in its taxi business while accelerating its transformation into a physical AI company.
Recently, Kakao Mobility officially entered the robot operations platform business. It has also partnered with LG Innotek to develop autonomous driving solutions.
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