Risk Cleared and ‘Management Renewal’ Initiated
Clearing non-core affiliates for AI transformation
Stock price rebounds nearly 6% right after the verdict
With the legal risks for top executives resolved, Kakao is now set to accelerate its transition into an ‘Artificial Intelligence (AI) platform company.’ Kakao, which led the innovation in the mobile era with KakaoTalk, is drawing attention as it prepares to climb onto a new growth trajectory in the AI era.
The IT industry on the 21st viewed the acquittal of founder Kim Beom-soo as an opportunity for Kakao to recover the “lost three years.” During the period when competitors like Naver were entering the large language model (LLM) race, Kakao couldn’t speed up AI investments and global expansion due to the founder’s trial and market uncertainties. Meanwhile, domestic and international big tech companies have intensified their AI investments, leading to criticisms of a widening technological gap. Major projects like the expansion of the Piccoma business in Japan, entry into the European content market, and consideration of acquiring promising startups were mostly put on hold. A Kakao representative stated, “It was indeed challenging to respond swiftly to rapid market changes due to ongoing trials and investigations over the past two years,” adding that the resolution of risks would make them more flexible.
Kakao’s focus on organizational renewal and an AI-centered management strategy is expected to gain momentum. The CEO, Jeong-eun, has repeatedly emphasized the ‘selection and concentration’ policy in shareholder letters since taking office. The number of subsidiaries has been reduced from 132 to 99 and plans are to further cut it down to around 80 by the end of the year.
The elimination of legal risks is anticipated to provide a substantial boost to these renewal efforts. It is evaluated that favorable conditions have been set for enhancing global AI collaborations and research and development (R&D) investments. Kakao announced a plan to integrate OpenAI’s ChatGPT-based technology into its generative AI model ‘Khanana,’ to be applied in KakaoTalk. The ambition is to make the ‘AI Agent’ within the chat a central hub of Kakao’s ecosystem, connecting search, advertising, and commerce.
Positive changes are also expected in Kakao’s new financial ventures. Kakao is pursuing a Korean won-pegged stablecoin business centered around its blockchain affiliate, KAI. Integration of payment networks with Kakao Bank, Kakao Pay, and other financial subsidiaries is under review. The strategy is to integrate purchase, payment, and remittance flows within KakaoTalk using tokens, thus expanding its financial ecosystem. The industry assesses that this verdict will expedite financial negotiations and internal approval processes. Following a drop to 32,550 KRW last year, Kakao’s stock rose about 5.9% compared to the previous day, closing the regular session at 62,300 KRW following the acquittal.