November 1, 2023
From Monthly Review
0 views


Kyung-Pil Kim is a lecturer in the Department of Sociology at Korea University, Seoul. His research foci include neoliberalization, platform economy, and civil-military relations. He has recently published a work titled “COVID-19 Crisis and Crisis Management in South Korea, 2020–2021” in Globalizations (2023).

On October 15, 2022, Korean digital platform company Kakao was suddenly unable to provide its services due to a fire at its data center, causing people severe inconvenience. The messenger app KakaoTalk, on which almost all Koreans who use mobile phones relied, stopped working. In addition, many aspects of daily life, such as work, games, comics, music, transportation, consumption, and finance, were disrupted for one to several days. Koreans now realized that Kakao dominated their daily lives and the digital economy. Another major digital platform company, Naver, entered the top ten in market capitalization in Korea in 2015 and became the third-largest company by market capitalization in 2021. The first objective of this article is to determine how Naver and Kakao came to dominate the Korean digital economy.

As Naver and Kakao became dominant players in various sectors, each with dozens of affiliates, talk arose in Korea about the emergence of new chaebols. A chaebol—such as Samsung, Hyundai, SK, or LG—is a diversified and large-scale conglomerate governed dynastically by an owner and their family, and the management style of Naver and Kakao appeared to be typical of chaebols. In 2019, Korea’s Fair Trade Commission designated Kakao as an enterprise group subject to limitations on mutual investment; the same was done for Naver in 2021. However, it is unclear whether Naver and Kakao should be considered new chaebols. Therefore, the second objective of this paper is to clarify these two organizations’ commonalities and differences with chaebols.

Over time, the workers of Naver and Kakao have become organized. In 2018, these employees formed group-level unions encompassing multiple affiliates, even though forming unions in information technology companies or digital platform companies is difficult. Like platform companies in all countries, the number of direct employees is small compared to revenue or market capitalization. Moreover, the establishment of unions covering multiple affiliates, rather than individual workplaces or companies, was unusual in Korea. This is because the Korean labor market is highly fragmented, wage negotiations are conducted at the level of individual companies, and wages are paid by combining seniority-based wages with performance-based pay rather than job-based pay. The third and final objective of this paper is to explain the labor control strategies of Naver and Kakao and describe how labor unions were formed and developed in these companies.

The Economic Dominance of Platform Companies

Digital platforms have become a place for individuals and groups to establish and engage in various economic relationships and transactions. Platform companies absorb users’ activities and resources, convert them into data, perform algorithmic processes for matching, and generate revenue. In a way, they turn human activities, emotions, ideas, and everything else into commodities; rather than producing goods directly, they create and mediate markets where information, goods, and services are exchanged. As such, some people use the word “rent” to describe the profits of digital platform companies. In addition, platform companies’ businesses unfold within relationships with the state. The state can play a pivotal role in creating and developing markets and business environments in new economic sectors. Even when markets are established and companies and economies have developed to some extent, national policies and relationships with companies remain important.

Platform companies provide infrastructure that mediates various user groups and creates network effects while relying on these effects, resulting in strong monopolistic tendencies. Instead of focusing on short-term profits or reducing debt ratios, platform companies demonstrate a strong growth orientation and strive to secure market dominance. They try to attract a wide range of users by reducing or eliminating the prices of services or goods, on the one hand, while raising the price of different services or goods, on the other, to compensate for losses from price reductions or clearances. This is done with a core architecture designed to govern the possibilities for interaction. Such characteristics make platforms key business models for extracting and controlling data. When platforms gain popularity, users can benefit from lower prices and access to more data-driven services. As this happens, the entire market coalesces around a platform.

The digital economic dominance of platform companies is characterized by their ability to create economic relationships and sites of transaction that maximize their ability to absorb user activity and resources in order to obtain a monopolistic position in the digital market. Two factors concretely explain the dominance of platform companies. The first factor is the diversification of business. To keep people on their platforms and absorb their activities and resources, companies must constantly innovate their services, contents, and technologies amid fierce competition. Platform companies provide services and content across as many areas as possible to obtain a monopolistic position and gain profits and market dominance. In other words, companies can deploy a diversification strategy by mobilizing resources and assets to enter other business areas related to their platform. They can do this by either spinning off new companies from an existing organization or creating subsidiaries and acquiring other companies.

The second factor is corporate governance, which is related to the power and responsibility of a company and is closely related to business performance and profit distribution. Moreover, corporate governance is connected to corporate diversification and labor management, making it a key element in understanding the digital economic dominance strategies of platform companies. Whether the ownership and management of a company are separated and whether group affiliates can operate autonomously are important for describing the forms and dynamics of digital economic dominance. Korea’s representative corporate structure, the chaebol, is characterized by a highly diversified group of companies owned and controlled by their owners and their families. The owner accumulates capital in various sectors and dominates the Korean economy by controlling multiple affiliates. The corporate governance structures of Naver and Kakao may be similar to that of chaebols, though they may also differ in some aspects. However, the nature and changes in diversification and governance are not determined solely by a company’s will and strategy, but can vary depending on government regulations.

The digital economic dominance of platform companies is related to the control of labor. The platform labor that researchers have analyzed is “a form of employment that uses an online platform to enable organizations or individuals to access other organizations or individuals to solve problems or to provide services in exchange for payment.” However, other types of labor are also associated with platform companies, including workers directly employed by such companies. Controlling such labor can be crucial for a company’s performance and dominance. Factors discussed in capital-labor relations, such as worker treatment, working hours, and employment stability are important when explaining the labor control of platform companies; organizational culture should also be considered. The interests of companies and labor often clash regarding these factors. Labor organization and collective action can occur if the wage system is biased toward corporate profits, employment is unstable, labor intensity is high, working hours are long, the organizational culture is authoritarian, and communication is unclear.

The Rise of the Platform Economy in Korea

The platform economy in Korea was created during the 1997 Asian financial crisis, when the strategies of the state and companies interacted, alongside technological developments. Since the 1980s, the government has promoted the information and communications industry and built infrastructure with chaebols. As an alternative to the 1997 crisis, the government focused on developing the information technology industry and fostering venture companies. The government helped venture companies raise funds by activating venture capital markets, providing start-up loans, and influencing the financial market, KOSDAQ, while building infrastructure to enable Koreans to access the Internet easily. The government’s strategy caused problems such as venture bubbles, overinvestment, and corruption, but it helped create the platform economy.

However, in the early stages, Korean platform companies faced difficulties due to a lack of content and services. Although there were many Internet users, Korean-language websites and documents were scarce, and companies could not attract users. Companies like Naver and Daum (which was later acquired by Kakao) gathered users by imitating the services and user activities of PC communications companies, which provided bulletin boards, chat rooms, and data rooms, gathering young users who were eager for new ways of communication and relationships. Those who accessed PC communications exchanged and distributed information through topic-based online communities.

Naver and Daum created web portal platforms, focusing on community and chat services rather than search engine development, and gathered users by providing news and information. They also offered free email and personal blog/homepage services, encouraging users to visit their platforms frequently and stay longer. Naver and Daum also generated profits through advertising, e-commerce, gaming, and selling other content. As user activity increased, they developed their own search engines and became the standard for early Korean Internet and platforms, absorbing almost all information through network effects. Websites and platforms outside the web portal became providers of content and services for the portal, and the portal’s influence was further strengthened.

In 2007, the iPhone was launched in the United States, and began being sold in Korea in November 2009, creating a new market. This provided Naver and Daum with new opportunities and potential crises. If they could not adapt quickly to the new digital ecosystem, their dominant position could disappear. The spread of smartphones also fueled the rapid growth of new companies like Kakao.

The Spread of Smartphones and Government Support

Smartphones spread rapidly. In March 2010, Kakao launched its mobile messenger KakaoTalk, which attracted more than one hundred million subscribers by July 2013, offering free use and mobile group chat services, becoming the dominant player that completely replaced WhatsApp. As many people started using smartphones extensively, platform companies could quantify almost all human activities and collect them as data. As a result, profit-making opportunities dramatically increased. Naver and Kakao tried to absorb users’ activities and resources to the fullest extent. They aimed to integrate the distribution and consumption of goods, provide various combined services, and invest maximal resources to preempt all relevant markets. Once a platform business becomes the top player, it can maintain its dominant position due to network effects. Naver and Kakao played a central role in many services, connecting people to each other, expanding into new areas, and enabling users to conduct all mobile activities on their platforms.

The government actively supported platform companies, as it considered fostering the platform economy core to aid its strategy of securing economic growth and national competitiveness in the global market. Most policies related to platform companies were managed in the context of industrial development or economic growth. The government supported companies to avoid lagging behind foreign competitors, including those in the United States. Even after the 2010s, the government built infrastructure necessary for developing the platform economy, supported funding, and worked on deregulation. This stance is reflected in the Korean New Deal announced by the government in 2020. The government defined it as a development strategy to overcome the COVID-19 crisis and lead the global economy; one of these plans was the Digital New Deal. Essentially, the plan was for the government to create a digital network artificial intelligence system—essential for the platform economy—and to collect data under government leadership for capital accumulation and governance.

Although the government initially imposed no regulations on platform companies, they began introducing regulations when the expansion and monopoly of these companies began to appear problematic—that is, after two companies were already dominating the digital economy. The government designated Kakao (in 2016) and Naver (in 2017) as business groups subject to disclosure based on total assets. Furthermore, Kakao (in 2019) and Naver (in 2021) were designated as enterprise groups subject to limitations on mutual investment to suppress their concentration of ownership and control. The Fair Trade Commission of Korea has not yet established a system to supervise the monopolies of platform companies or regulate their market dominance abuse. It has only, for example, imposed fines or issued corrective orders on socially problematic abuses of market dominance and prohibited the exploitation of voting rights issues.

The Strategies of Naver and Kakao

Naver’s Spin-Off Strategy

As smartphones became widespread, Naver expanded its business into areas adjacent to its existing operations. Starting from the search market, where their share in Korea exceeded 50 percent, they expanded into shopping, music, web comics, and novels. They also entered the digital financial services and cloud sectors. When expanding, Naver first created a related organization within the company, a company within a company, and, when it became competitive, spun it off into a separate corporation. Important sectors of Naver’s business, such as web comics and Naver Pay, are companies that grew through the company-within-a-company method. Naver’s spin-offs, mergers, and acquisitions were all top-down decisions. When management made a decision to launch a new affiliate, Naver proceeded to secure ownership of the majority of the subsidiary’s shares.

Naver’s domestic subsidiaries in Korea increased from twelve in 2002 to seventy-one in 2017; after adjustments, they reached forty-three in 2020 and forty-five in 2022. Naver operates in five main areas through spin-offs, mergers, and acquisitions. The first area is the search platform. Naver relies on its strong search presence and makes over 40 percent of its total operating profit from search and display advertising businesses. The second area is commerce. Naver earns over 20 percent of its total operating profit through advertising, brokerage, sales, and membership services. As of 2022, Naver ranks first in the Korean e-commerce market share based on transaction amount. Moreover, its membership service, which bundles Naver’s main services into paid offerings to lock users into the platform, has grown rapidly since its launch in 2020, reaching ten million users in February 2023.

The third area is financial technology. Naver earns about 14 percent of its total operating profit through financial services by targeting small- and medium-sized enterprises and merchants, as well as through Naver Pay, the largest simple payment service in Korea. Naver connects its advantages in the shopping business with finance to generate revenue and collects a large amount of data, such as consumer purchasing patterns, to use in its business. The fourth area is content. Naver earns about 15 percent of its operating profit from services such as web comics, web novels, and music. Based on the success of early web comics, Naver acquired Wattpad, a web novel company, and in 2021 became the world’s number one storytelling platform. It has also expanded into video communication and virtual avatar services through spin-offs. The fifth area is the cloud, which accounts for about 4.9 percent of Naver’s total operating revenue.

Naver also conducts business overseas, with Japan being the core region of its operations. Although Naver faced difficulties in the Korean mobile messenger market, ultimately losing to Kakao, it achieved great success with the launch of Line in 2011, which became the leading messenger in Japan—a much larger market than Korea. In 2021, Naver established A Holdings, Japan’s largest platform company, by integrating its management with Yahoo Japan, the country’s largest portal-platform company, to counter U.S. and Chinese platform companies and consolidate its dominance in the Japanese market. Naver is also expanding into the Southeast Asian market and conducts Internet banking business in Japan and the Asian market using Line, which they could not do in Korea.

Kakao’s Mergers and Acquisitions Strategy

Kakao expanded its business area by adding new services to KakaoTalk. As virtually all Korean smartphone users use KakaoTalk and are potential customers for almost all online services, Kakao sought to expand its business. In July 2012, Kakao launched a game called Anipang, imitating the social game business model of Facebook and Myspace, and achieved great success, turning a profit for the first time. Unlike Naver, Kakao focused on the domestic market, as it possessed the leading messenger in Korea and its overseas sales were relatively small.

Although it also introduced the company-in-a-company system, Kakao enhanced its dominance in the digital economy mainly through several large-scale mergers and acquisitions. In 2014, Kakao acquired Daum, Korea’s leading platform company from the late 1990s to the early 2000s. Then, in 2016, they acquired Loen Entertainment, the largest music service company in Korea. Through these acquisitions, Kakao increased its cash flow, revenue, and operating profit. Kakao quickly acquired start-ups and companies with technology and expertise. From 2016 to August 2019, Kakao acquired forty-seven companies based on consolidated affiliated company standards—the most among the top five hundred companies in Korea—and ranked sixth in investment amount. As a result, Kakao’s affiliates rapidly increased from 45 in 2016 to 72 in 2018, 97 in 2020, 118 in 2021, and 136 in 2022.

Kakao’s business can be divided into the platform sector, which accounted for 52.8 percent of its revenue in 2021, and the content sector (47.2 percent). By leveraging KakaoTalk, which has a 95 percent share in service usage time in the Korean market as of December 2021, Kakao generated revenue through advertising, product sales, and intermediation. It also advertised through Daum. Furthermore, through affiliates, such as KakaoT and Kakao Navi, Kakao monopolistically positioned itself in the intermediary sector and generated income. It provided platforms and earned commissions for services such as taxis, chauffeur services, parking, and bike rentals. In 2014 and 2017, Kakao launched Kakao Pay and its financial affiliates and, in turn, collected user data and generated financial revenue. Kakao Pay, the first mobile payment service in Korea, has the highest usage rate in the mobile remittance sector, while Kakao Bank has grown into a leading online bank.

The music business represents the content sector. Melon, a music platform acquired by Kakao in 2016, holds half of the Korean market based on average unique visitors as of December 2021. Kakao has directly acquired music labels and video production companies. It also acquired the web novel service Radish and sells content subscriptions through Kakao Page, Kakao Webtoon, and Piccoma, a comics platform operated by Kakao’s Japanese affiliate. Additionally, Kakao develops game content, partners with affiliates through channeling and publishing methods to generate revenue, and earns profits through artist management activities, as well as video content planning and production.

Naver and Kakao’s Corporate Governance Structure and Chaebols

Although Naver operates numerous affiliates, it is effectively controlled by its founder, Hae-jin Lee. Lee is not the CEO or a registered director, but holds the position of Global Investment Officer. Furthermore, he only holds approximately 3.7 percent of the shares in Naver Corporation, which acts as the de facto holding company of the Naver Group. While this is the highest individual stake, it is lower than that of the National Pension Fund of Korea or foreign institutional investors.

To address the lack of ownership stake, Naver employed three strategies: (1) equity swaps with domestic companies, (2) the indirect control of domestic affiliates through Naver’s overseas affiliates, and (3) the utilization of treasury stock. Naver increased friendly ownership through equity swaps with companies such as Mirae Asset, CJ, Hive, E-Mart, and Shinsegae International. It exerted control over Korean content affiliates through its U.S. entity, Webtoon Entertainment. Furthermore, through A Holdings, established in collaboration with SoftBank, it secured a stake in Line Corporation and exerted control over domestic affiliates. As of the third quarter of 2022, Naver’s treasury stock accounted for 8.58 percent.

With these measures, Lee maintained his position as the largest shareholder since August 2001 and gained control over the entire group. Naver Corporation owns major affiliates, which hold stakes in other companies, forming a group governance structure. The Korea Fair Trade Commission designated Lee as the so-called same-person nominee for Naver, an acknowledgment of his substantial direct control over the entire Naver Group and influence over key personnel appointments and major decision-making processes.

Like Naver, Kakao is effectively controlled by its founder, Beom-su Kim. Like Lee, Kim has never held the position of Kakao CEO. He served as the chairman of the Kakao board of directors until March 2022 and has since maintained only the position of head of the Kakao Future Initiatives Center and in-house director at Piccoma. However, the management team, including the co-CEOs of Kakao and the heads of major subsidiaries, are connected to the founder through blood, school, and work.

As of the third quarter of 2022, Kim holds a 13.3 percent stake in Kakao (the group’s de facto holding company), and Kcube Holdings owns a 10.5 percent stake. These combined stakes are close to 24 percent, which is high considering that the major shareholders of Kakao, the National Pension Service of Korea and Tencent, each owns just over 5 percent, and the majority are small shareholders.

Kakao is a listed company that controls several subsidiaries. In 2022, it became the largest shareholder of sixteen major affiliated companies, which formed a structure in which they hold stakes in the remaining Kakao affiliates. Thus, vertically integrated entertainment, games, and mobility sectors control twenty to fifty subsidiaries. The Fair Trade Commission designated Kim as the same person for Kakao in 2016, one year earlier than Naver, judging that he controls the entire Kakao Group.

Kim dominates Kakao through his personal stake and that of Kcube, an investment and financial company of which Kim’s brother was the CEO until 2021. Furthermore, Kim and his wife were members of the four-person board of directors, and their two children worked at the company. This led to criticisms that Kcube was merely a means for the Kim family to control the Kakao Group, with suspicions of management succession and tax evasion. Both the Korean Fair Trade Commission and the Korean National Tax Service investigated the matter. Moreover, when Kim gifted Kakao shares to his wife and two children in February 2021, people’s suspicions about family management and succession resurfaced.

We now shift to Naver’s and Kakao’s similarities with and differences from chaebols. The distinctive characteristic of chaebols is the control of the owner and their family over multiple affiliates. Hence, we can analyze Naver and Kakao based on corporate governance structure and diversification. First, regarding corporate governance structure, Naver and Kakao control a group of numerous affiliates. Similar to chaebols, both companies have not effectively separated ownership and management. The owner controls the entire group through either a holding company (such as in the cases of Naver, Kakao, and most chaebols) or circular investment among affiliates, as seen in Hyundai Motors. However, there are also differences. While many chaebols remain controlled by both the owner and their family—the children or grandchildren of founders currently control several chaebols—the two platform companies have not demonstrated such a trend due to their relatively short histories. The founders assert that they will not follow such a path, although certain incidents within Kakao have raised doubts about this.

Second, concerning business diversification, they all conduct business in various fields and, in some cases, possess more than one hundred subsidiaries. They change the form of capital accumulation according to historical conditions and market situations and make profits. Naturally, they do business in different sectors. Many chaebols accumulate capital in the form of industrial capital and obtain profits as commercial and financial capital. In contrast, Naver and Kakao obtain profits by absorbing user activities and resources, forming and intermediating the market, or through financial capital, rather than direct production or distribution.

Naver and Kakao’s Labor Control and the Formation and Development of Labor Unions

Labor control was essential to the capital accumulation of Naver and Kakao and was closely linked to their economic domination strategy. Their labor control methods had three major characteristics. First, they divided and ruled workers. Both companies involve active collaboration and connections between departments within their headquarters and between affiliates. The dependent subsidiaries often receive services only from higher-level affiliates, rather than conducting their own business. However, Naver and Kakao set different wages, working hours, corporate welfare systems, and employment stability for each affiliate, allowing them to reduce wages and management costs and either fragment labor management responsibilities or transfer them to other dependent subsidiaries. According to a person who led the creation of the Naver union, employees who work at the headquarters are paid almost twice as much as dependent company workers, and incentives and corporate welfare differ significantly. Although affiliates with distinct businesses such as Webtoons, LINE, and SNOW treat their workers identically, vertically integrated corporations do not. Moreover, as Naver and Kakao expanded their affiliates, organizational restructuring occurred frequently, and workers regularly (and often unwillingly) moved positions. Increasing the number of affiliates and creating a holding company structure to control all affiliates was not only their digital economy dominance strategy; it was also the founder’s group dominance strategy and a labor force control strategy.

Second, they controlled labor authoritatively. Early on, Naver and Kakao claimed to create a horizontal organizational culture and facilitate smooth communication among members, and they continue to make this claim today. However, as the founders began to dominate and control the entire group, they began distributing power according to their closeness and connections to the founders. Factions were formed within the group based on school and regional ties, conflicts arose between factions, and an authoritative organizational culture emerged, hampering internal communication. Authoritative control led to harassment and labor stress for employees with little power in the workplace. In 2021, workers in both companies experienced difficulties due to workplace harassment, even taking their own lives. In a survey by the Ministry of Employment and Labor targeting 4,028 Naver employees, 52.7 percent of respondents said they had experienced workplace harassment at least once in the past six months. In some instances, workers were slapped in the presence of others, and some workplace harassment victims resigned due to the failure to appropriately penalize the perpetrators.

Third, these companies do not pay the promised allowances, and they force employees to work overtime. In June 2021, the Ministry of Employment and Labor found that Kakao violated the working-hour cap system and forced additional work on pregnant women. Moreover, Kakao did not properly pay several workers allowances for extended, overnight, or holiday work. Kakao’s workers claimed that the company uses an unclear performance pay calculation method and does not pay fair wages while forcing long hours of work. The case of Naver is similar. The ministry revealed that Naver also did not properly pay allowances for extended, overnight, or holiday work, and did not comply with basic labor-related regulations, such as when the company forced overtime on pregnant women.

In November 2020, the Korean Confederation of Trade Unions investigated the working environment of workers in the Pangyo area of Gyeonggi Province, known as the “Silicon Valley of Korea,” where over eight hundred companies, including the de facto headquarters of Kakao, are located, showing that 30 percent of workers had worked more than fifty-two hours per week and 46 percent did not receive sufficient allowances for additional labor. Furthermore, 47 percent of respondents had experienced or witnessed workplace harassment, including sexual harassment.

As Naver and Kakao grew, workers organized to challenge their labor control methods. In April 2018, the first labor union in the IT industry was launched at Naver. Four people from different affiliates met and formed the union through an open chat room system, gathering one thousand members just four days after the launch. On February 20, 2019, they carried out the industry’s first collective action by going on strike while attending a group movie screening. In October 2018, another union was formed in Kakao. A unique feature of these unions was that they encompassed multiple affiliates within the group, rather than individual companies or workplaces. This was unusual, as Korea’s capital-labor relations are not conducive to such unionization. The Korean labor market is highly segmented, providing seniority-based pay rather than job-based pay and utilizing a wage system that combines seniority-based pay with performance-based pay. Moreover, company-level wage negotiations are common.

However, Naver and Kakao workers unionized in a new way to counter the company’s divide-and-rule strategy. The labor union leaders believed that the treatment of workers varied across different affiliates, despite their large number and frequent collaborations. They also perceived a strong sense of discrimination based on which affiliate they belonged to. They shared this awareness with union members and believed that to effectively address these issues with management and improve conditions for all workers, a union that encompassing multiple affiliates was needed. Even if they are similar, some Naver and Kakao workers have high wages and stable employment, while others suffer from low wages and job insecurity, negatively affecting all workers. Thus, they believed they must fight together and focused on negotiating with the headquarters, which played a role as a holding company and influenced negotiations with other affiliates. They also negotiated with individual affiliates accordingly.

The unions did not argue for the conditions of all affiliates to be equal, but jointly demanded labor rights, such as breaks for rest and group-wide minimum wage. As the unions began to gain improvements in working hours, wages, and the working environment, the Naver union grew to include twenty-three affiliate members in 2023. Meanwhile, the Kakao union, which started with one hundred members, now has over four thousand members, comprising about half of Kakao’s total number of workers. Moreover, these unions are trying to organize struggles at the industry level by combining the Korean Confederation of Trade Unions’ federation of chemical, textile, and food workers with nine other IT company unions.

Lessons from Korea’s Experience

Korea’s experience highlights three issues. The first is the issue of the pros and cons of national policy characteristics. The Korean government regards the platform economy and platform companies as a means of economic growth and national competitiveness improvement and has intensively supported their development. Most policies related to platform companies were implemented as part of industrial policies or economic growth strategies. In the National Assembly, regardless of political party, assembly members helped the government and companies rather than raising critical issues. Such policies have contributed to creating Korean companies that can compete with U.S. platform companies in the domestic and some Asian markets. However, they could not address the problem that the online world was transforming into a place solely for corporate profit-seeking, with one or two companies dominating the digital market. As national policies are biased toward corporate interests and passive in building corporate regulatory measures, all economic entities, except one or two companies, continue to suffer from this situation.

The second issue is related to the pros and cons of Naver’s and Kakao’s management styles. The founders of these companies control and dominate the entire group, similar to chaebols. However, the distinct advantages and disadvantages of this approach are intertwined. In such companies, there are few players possessing veto power. Thus, bold, quick decisions can be made by the founders, and once a decision is made, resources can be invested intensively and swiftly. In other words, if the founder’s decision is rational, they can quickly take advantage of the market and generate significant revenue and profit by making aggressive investments. However, this approach has downsides, such as presenting a high risk to management, which inevitably leads to an authoritarian organizational culture and can cause significant ownership and management issues after the founder steps down. Naver’s and Kakao’s approach incurs these disadvantages like genetic traits, and the problem remains that a few companies dominate the economy.

The third issue is the organization of platform company workers. While discussions on platform labor often focus on gig workers connected to the platform, the labor of those who are directly employed by platform companies and contribute to their creation must also be recognized. Korea’s experience demonstrates that, even in the IT industry and platform companies with multiple affiliates under a holding company, workers can establish unions that encompass corporate groups or industries. This is significant, as creating unions outside individual companies or workplaces can be extremely challenging. The unionized workers of Naver and Kakao have endeavored to improve working conditions not only within their respective companies but also for all affiliates. Through solidarity with workers from different affiliates, they have pursued efforts to enhance working conditions across the IT industry.

Notes

  1. Unless otherwise indicated, references to Korea in this paper refer to the Republic of Korea/South Korea.
  2. Naver Securities, naver.com, April 4, 2023 [in Korean].
  3. Nick Srnicek, Platform Capitalism (Cambridge: Polity Press, 2016); José van Dijck, Thomas Poell, and Martijn de Waal, The Platform Society: Public Values in a Connective World (Oxford: Oxford University Press, 2018); Alex Rosenblat, Uberland: How Algorithms Are Re-Writing the Rules of Work (Berkeley: University of California Press, 2018); Shoshana Zuboff, The Age of Surveillance Capitalism (New York: Public Affairs, 2020).
  4. Guy Standing, The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay (London: Biteback, 2017); Brett Christophers, Rentier Capitalism: Who Owns the Economy, and Who Pays for It? (London: Verso, 2020).
  5. Eurofound, Employment and Working Conditions of Selected Types of Platform Work (Luxembourg: Publications Office of the European Union, 2018), 9.
  6. The story in this section can be found in Kyung-Pil Kim, “The Rise and Development of the Platform Economy in South Korea,” International Journal of Asian Studies (2022): 1–15.
  7. PC communication services used a keyboard, a modem, and telephone lines to enable users to communicate with each other via a text-based interface. See Kwang-Suk Lee, “On the Historiography of the Korean Internet,” The Information Society 32, no. 3 (2016): 222.
  8. Yong-Jin Won and Seo-Yeon Park, Mega Platform Naver (Seoul: Culturelook, 2021), 215–17 [in Korean].
  9. Kyung-Pil Kim, “COVID-19 Crisis and Crisis Management in South Korea, 2020–2021,” Globalizations 20, no. 4 (2023): 589–91.
  10. Fair Trade Commission Sets the Pace for Review Guidelines and Amendments on ‘Monopoly Platforms’ Including Kakao,” Hankyoreh, October 19, 2022 [in Korean]; “Sanctions Imposed on Kakao Mobility for Steering Calls to Affiliated Taxis,“ Policy Briefing, February 14, 2023 [in Korean]; Kim Beom-soo, “Facing Demands for Conversion to a Holding Company,” DealSite, February 8, 2023.
  11. The following story about Naver is based on Naver’s Business Report, com [in Korean].
  12. Fair Trade Commission Corporate Group Portal, go.kr [in Korean].
  13. “Shifting to a ‘Two Strong, One Central’ Market Dominance,’” Aju Business Daily, February 12, 2023; “Naver Membership Expansion: Not Enough with Only 170 Partners,“ Etnews, February 2, 2023, com [in Korean].
  14. Won and Park, Mega Platform Naver, 222.
  15. Fair Trade Commission Corporate Group Portal.
  16. The following story about Kakao is based on the KaKao Business Report, kakaocorp.com.
  17. “Separating Ownership and Management,” Newsway, February 22, 2023.
  18. Lee Hae-jin Dominates Naver with ‘3% Stake,’” ChosunBiz, July 16, 2021 [in Korean]; “Lee Hae-jin’s Strengthened Dominance Despite 3.7% Stake,” Newsway, February 22, 2023 [in Korean].
  19. Financial Supervisory Service, Retrieval and Transfer System Data Analysis, dart.fss.or.kr/main.do.
  20. “Chaebol-like Corporate Governance Structure,” PoliNews, January 18, 2022, co.kr [in Korean]; “Kakao, the Rising Star of IT Companies with a Governance Structure at the Level of Small and Medium Enterprises,” ShinDonga, April 1, 2022, shindonga.donga.com [in Korean].
  21. “Chaebol-like Corporate Governance Structure,” PoliNews; Financial Supervisory Service.
  22. Financial Supervisory Service; “Kakao, the Rising Star of IT Companies,” ShinDonga.
  23. “Kakao, the Rising Star of IT Companies,” ShinDonga; “Even Kim Bum-soo Stepped Away from Management,” Newsway, February 8, 2023, co.kr [in Korean].
  24. The following story is based on investigative programs and news articles that individually interviewed those who led the establishment of labor unions at Naver and Kakao. See the following: “’Union’s Here!’: Kakao’s Union Runs Again Today, Aimed at ‘Closing the Gap,’Kyunghyang, March 2, 2023 [in Korean]; “I Do Not Want to Know 475a,” XSFM, YouTube video, 1:09:50 [in Korean]; “I Do Not Want to Know 475b,” XSFM, September 30, 2022 [in Korean].
  25. Kakao Labor Union Membership Surpasses 4,000,‘“ Hankyoreh, January 12, 2023, co.kr [in Korean].
  26. Seung-Joo Lee, “Dream Workplace?: Naver and Kakao’s In-House Bullying Unveiled,” Kwanhun Journal 160 (2021): 253 [in Korean].
  27. Lee, “Dream Workplace?”
  28. Korean Confederation of Trade Unions, Survey on Working Conditions of IT Laborers in Pangyo (Seoul: Korean Confederation of Trade Unions, 2020) [in Korean].
  29. The following story is based on investigative programs and news articles that individually interviewed those who led the establishment of labor unions at Naver and Kakao. See “’Union’s Here!’”; “I Do Not Want to Know 475a”; “I Do Not Want to Know 475b.”
  30. “’Union’s Here!’”; “I Do Not Want to Know 475a”; “I Do Not Want to Know 475b.”



Source: Monthlyreview.org