SEJONG (Yonhap) – South Korea's antitrust watchdog has launched an investigation into Kakao Corp., the operator of the country's most-used messenger service Kakao Talk, for possibly abusing its market leader position, industry sources said Thursday.

Kakao is also under investigation by the Fair Trade Commission (FTC) over allegations that it had also abused its market dominance in deals with another service supplier, SK Planet.

According to insiders, Kakao Talk has come under scrutiny after it unilaterally nullified a contract with SK Planet that had sold mobile gift certificates on-line. SK Planet had entered the mobile gift certificate business in 2007 and signed a partnership agreement with Kakao Talk in 2011. The latter, however, nullified the pact in June after it decided to enter the gift certificate field on its own.

Data showed that gift certificates traded on Kakao Talk reached 260 billion won (US$256 million) last year.

Separately, the state regulator is also looking into the scheduled merger between Kakao Talk and Daum Corp., the country's No. 2 Internet portal operator.

Kakao is the operator of Kakao Talk, a messenger service that commands 37 million users in Korea with a population of 50 million.

On Wednesday, shareholders of Daum and Kakao approved the merger deal that will create one of the biggest tech companies in Korea once it officially launches on Oct. 1.

"If allegations are raised and official complaints are lodged, the FTC will conduct necessary investigations," an insider said.

Kakao Talk said it respects all government rules and will cooperate to the fullest of its ability.