Kakao Taxi

There is a huge debate about Kakao Taxi disrupting the Taxi and on-demand driver market. In Korea, unfortunately, there is a lot of drinking, and as the DUI (drunk driving) laws have become stricter, people have relied on taxis or on-demand drivers to drive them back home with their vehicle. This market was mainly maintained by small call center businesses that connected the customers with taxis and on-demand drivers. Recently, Kakao Taxi came into action. Given the convenience and Korean’s love for Kakao, the small call center businesses started losing business. In order to survive, the small call centers made Taxis and on-demand drivers to not use Kakao Taxi and complained that Kakao Taxi was anticompetitive.

Hmmmm….If we follow the small call center logic, we would still have typists, people unloading trades instead of containers, and more. Unfortunately, this is how capitalism works. Innovation disrupts. It is this creative destruction that raises productivity and quality of life. Of course, there are winners and losers but you cannot just complain. Consumers vow that Kakao Taxi is much better. It tells the exact location of the taxi or driver, gives the estimated time, and it is reliable. It is a superior product than the call center. The small call centers just failed to innovate and will disappear.

So what can be done for the small call centers? Well, time to change. Of course, this is hard for small business but this is how capitalism works. You have to change when the circumstances change. You cannot ask the government to just protect you. Also, given that the consumer surplus is so much larger from Kakao Taxi, there is really no ground for the small call center businesses.

Welcome, to capitalism. Innovation and efficiency wins and so those a lot of people. For the losers, well, those who change will have great future for those who don’t well…God have mercy on them.