Kakao faces growing regulatory risks as political scrutiny rises. Following an inquiry into possible stock market manipulation, the president of South Korea called for a study of Kakao’s taxi app in response to allegations about monopolistic activities. As a result, the internet behemoth is coming under increasing regulatory scrutiny.

Over the past three months, shares of Kakao Corp (035720. KS), the company behind Korea’s most popular chat software, KakaoTalk, and a leader in digital banking, cab services, and entertainment, have fallen 27%, undershooting a 10.5% decline in the overall market and indicating mounting regulatory worries.

Analysts caution that these issues might get worse for the group and cause unwelcome diversions at a time when the company is trying to invest in infrastructure and advance artificial intelligence to compete with nearby rival Naver Corp. (035420. KS).

Park Ju-gun, chairman of corporate analysis company Leaders Index, claimed that Kakao’s concerns “appear to politicize beyond their essential reality.” “Its dominance in the country makes it a useful subject to draw the public’s attention to before the general elections next April.”

At a public meeting on Wednesday, South Korean President Yoon Suk Yeol stated that Kakao Mobility’s taxi-hailing service was acting monopolistic and that this behavior needed to be reviewed. In response to a taxi driver’s protest about what he claimed were market abuse practices, he remarked, “In the sense that they attracted drivers and then raised prices, it’s very immoral, and the government should take action.”

When Reuters called the president’s office for comment, they provided no further details. Kakao refused to comment on the article. To overhaul the price structure, Kakao Mobility, which controls more than 90% of the South Korean taxi-hailing business, said late on Wednesday that it will call an urgent meeting with taxi drivers.

A year ago, a significant outage of KakaoTalk prompted worries about the group’s influence in the market and the degree to which businesses and consumers relied on the associated services of the very dominant mobile chat app.

When one of its executives was detained last month on suspicion of manipulating the stock market as the company acquired the K-Pop label SM Entertainment (041510. KQ), its regulatory issues worsened.

The Financial Supervisory Service (FSS), a regulatory body, said last week that it would report alleged violations of the Capital Markets Act to public prosecutors on behalf of Kakao, its affiliate Kakao Entertainment, and officials engaged in the SM Entertainment deal.

Legal experts predict that if a court finds misconduct at Kakao Corp., the business may be compelled to sell off a portion of its 27.2% ownership in the online bank KakaoBank (323410. KS) since it would no longer be able to maintain its position as the bank’s largest shareholder.

Concerns were raised when the government-run National Pension Service (NPS) said on Wednesday that it had shifted the goal of its Kakao investment from passive investment to one that entails a more active exercise of shareholder rights.

NPS failed to provide particular explanations for why it altered its investment goal. In the latest filing, it had a 5.4% share of Kakao.

“Kakao’s resources are currently being divided along various legal proceedings and probes by the prosecution and financial regulator,” noted Oh Dong-hwan, an analyst at Samsung Securities, in a note.

“It is necessary to pay attention to legal risks, as problems may arise in the status of KakaoBank depending on the probes’ results.”