Last year, Kakao was criticized for expanding its octopus foot business last year. Last year, Kakao was criticized for being a robber of an alley business area and expanding its octopus foot in the process of expanding its business. In fact, last year, the number of Kakao affiliates was confirmed to be 194, 56 more than at the end of 2020.
However, some argue that it should be viewed as securing a new growth engine rather than expanding the octopus of an existing large group, considering that mergers and acquisitions and early start-ups following the expansion of existing businesses were incorporated as new affiliates.
Kakao announced last years business report on the 21st. The picture is a view of the Kakao Pangyo office. [Photo = Kakao]
According to Kakaos business report on the 22nd, as of the end of last year, there were a total of 194 affiliates belonging to the Kakao corporate group. Among listed companies, 138 are domestic affiliates and 56 are overseas affiliates. This is an increase of 56 companies compared to 105 domestic affiliates and 33 overseas affiliates as of the end of 2020. This is an increase of more than 40% compared to the previous year. Compared to 81 affiliates at the end of 2017, the number more than doubled in five years.
In fact, according to the status of changes in companies belonging to large-scale corporate groups from August to October 2021, released by the Fair Trade Commission in November last year, Kakao ranked first with 14 companies with the largest number of newly incorporated affiliates. It is also the reason why it was criticized for expanding the octopus feet in addition to the controversy over the infringement of the alleyway due to the acquisition of the proxy driver company.
However, if you look closely at the newly incorporated affiliates, 23 out of 56 companies, or about 40%, are overseas affiliates that have invested in Southeast Asia, China, Japan, North America, or other global markets.
In addition, the remaining newly incorporated affiliates are either early start-ups that do not generate profits, or they are extensions of investments linked to existing businesses such as entertainment and games. This is why it is pointed out that the increase in affiliates cannot be the expansion of octopus.
Kakao Chairman Kim Beom-soo also mentioned in a state audit last year that Kakao has grown through investment and acquisition of startups rather than directly entering the business from the beginning, saying that it is different from the simple octopus structure.
Of course, there are voices to the contrary. This is because, unlike manufacturers, platform companies are not proportional to their size and market power. It is in the same vein that the Fair Trade Commission predicted losses in the review of platform company mergers and acquisitions last year.
This is because the platform is growing and expanding through business mergers through acquisitions of start-ups in various business areas, and is increasing its complex dominance in the market, under the judgment that it is necessary to prepare.
In industries centered on manufacturing, there is no problem in determining the target of M&A review based on sales, but platform companies can grow rapidly even without sales if they secure an ecosystem with a large number of subscribers and data. In addition, some point out that it is taking over competitors in the early stages of the business, hindering growth.
In response, an industry insider said that most of the platforms in Korea are considered free, causing many conflicts when trying to monetize them. explained.