이 기사는 2021년 09월 15일 07시56분 thebell에 표출된 기사입니다

Increased regulatory scrutiny on online platform businesses may have an impact on the sale process for SM Entertainment as South Korea's antitrust regulator targets platform giant Kakao Corp, which joined the race to acquire the entertainment company.

“Platform businesses have made our life more convenient, but at the same time, concerns about their power are growing,” Joh Sung-wook, chairperson of Korea Fair Trade Commission, said during a speech at one event in Seoul last Friday. “There are concerns about reduced competition and consumer claims are also on the rise.”

Industry watchers think Joh’s remarks targeted Kakao. KFTC recently launched an investigation of whether Kakao Mobility, Kakao’s mobility arm, treated affiliated taxi drivers unfairly when allocating rides. The move came after Kakao Mobility this summer attempted to raise taxi-hailing and bike rental fees, prompting a strong backlash from the public.

Heightened scrutiny on Kakao could put a break on growth in the tech giant’s online platform empire, industry watchers said. Kakao, which owns the country’s largest messaging app, has grown rapidly by expanding across sectors through mergers and acquisitions. But in the future, deals involving the company’s affiliates could be subject to stricter scrutiny.

Regulatory approval had been one of the least concerns for deals in the domestic entertainment industry as the market is fairly fragmented.

HYBE, South Korea’s largest entertainment company behind global star BTS, in May last year agreed to acquire 85% of Pledis Entertainment, the fourth-largest player, for 200 billion won ($170.8 million) in one of the biggest deals in the country’s entertainment sector. The acquisition received approval by KFTC in October.

The antitrust watchdog at the time judged that the deal was unlikely harm competition as there were several large entertainment management companies such as SM Entertainment, YG Entertainment and JYP Entertainment as well as media and entertainment companies such as Kakao Entertainment and CJ ENM.

However, KFTC could tighten its scrutiny on a possible takeover of SM Entertainment by either Kakao Entertainment or CJ ENM.

In addition, SM Entertainment operates fan community platform Bubble in partnership with JYP Entertainment. This could make KFTC to see Kakao’s attempt to acquire SM Entertainment through Kakao Entertainment as a further increase in its platform power. (Reporting by Pil-woo Choi)