Facts
In February 2023 the Korea Fair Trade Commission (KFTC) announced that Kakao Mobility, dominant in taxi-hailing apps, had covertly adjusted the general-call dispatch algorithm of its Kakao T app to favour its Kakao T Blue franchise taxis. From 20 March 2019 to mid-April 2020, franchise drivers within a six-minute pickup time were preferred over closer non-franchise drivers. From mid-April 2020, priority went to one AI-recommended driver chosen only among drivers with acceptance rates of at least 40%, later 50%; average rates were 70–80% for franchise drivers and about 10% for others. Short trips under 1 km were also withheld from or reduced for franchise drivers. The KFTC imposed a final fine of KRW 27.12 billion and a corrective order.
Question
The court had to decide whether treating franchise and non-franchise drivers differently in dispatch amounted to abuse of dominance and to discrimination as an unfair trade practice. The KFTC's case was that acceptance-rate-based AI dispatch looked neutral but was designed so that non-franchise drivers were structurally disadvantaged. Kakao Mobility argued that it had used acceptance rates in its dispatch logic before launching the franchise service, to ease difficulties in finding taxis. Whether the difference in treatment could be justified lay at the heart of the case.
Decision
On 22 May 2025 the Seoul High Court's 7th Administrative Division, presided over by Judge Koo Hoe-keun, annulled the KFTC's notification order, corrective order and fine in their entirety and ordered the KFTC to bear the costs. According to press accounts of the reasoning, the court held that from Kakao Mobility's standpoint franchise and non-franchise drivers could not be regarded as equally situated trading counterparties, so the conduct was not unjust discrimination in trading terms. The full reasoned judgment could not be found in public sources, so its reasoning is not summarised in more detail here. Because the High Court hears challenges to KFTC decisions at first instance, the case can go to the Supreme Court.
Why it matters
In this case an AI-assisted dispatch algorithm was reviewed by a court under competition law. The KFTC read the algorithm's design and outcomes as evidence of self-preferencing, while the High Court reached the opposite conclusion. The Supreme Court's decision, read together with the standards it set in the Naver case, will bear on how algorithms that allocate work to platform drivers are reviewed.
Related stages
The KFTC appealed; by October 2025 the Supreme Court had moved to a full review on the merits. No Supreme Court judgment had been reported as of September 2026.