“Governance Efficiency to Restore Fundamentals”
“KakaoTalk, to be revamped with user feedback”
Kakao plans to reduce the number of its group affiliates to 80 by the end of the year as part of governance efficiency. Kakao’s CEO, Jeong Sin-ah, communicated via a shareholder letter on the 13th that the number of affiliates, which stood at 132 when she first took office, was reduced to 99 within a year and a half. By the end of the year, it will be further reduced to around 80. She emphasized that this strategic direction is aimed at focusing on core competencies in the age of artificial intelligence (AI) and also represents Kakao’s commitment to regaining social trust.
Governance efficiency has been a key task continuously pursued by CEO Jeong since she took charge of the CA Council business in September 2023. The number of Kakao subsidiaries decreased from 142 when Jeong took over as business chief to 132 when she became CEO last March, and it has now been reduced to 99. Over two years, the number of affiliates has been reduced by 30%.
Jeong stated that by concentrating on core businesses and simultaneously implementing company-wide cost efficiency, Kakao achieved the largest quarterly operating profit of 185.9 billion KRW in the second quarter of this year, a 39% increase from the same quarter the previous year. This success is the result of improving the financial structure in a sustainable and stable manner, not just an one-time achievement. She added that the foundational strength promised in last year’s shareholder letter has been restored through efforts for governance efficiency and establishing a stable financial structure.
She also revealed plans to achieve a “quantum leap” through AI. Kakao is accelerating the discovery of new growth engines by combining AI with KakaoTalk and will introduce AI services tailored to individual users’ needs and preferences in the future.
By the end of this month, the jointly developed product with OpenAI, “ChatGPT for Kakao,” will be available without a separate app installation, allowing ChatGPT to be used directly from the KakaoTalk chat tab. Jeong stated, “Kakao will continue to collaborate with global AI companies like OpenAI, based on user-centric AI, to deliver the best AI experience by assembling the optimal combination of AI models, computing, services, and agents.”
On-device AI, “Kanana in KakaoTalk,” is also set to be released. It uses the lightweight model “Kanana Nano,” which operates solely within a smartphone, prioritizing user privacy.
Kakao also plans to enhance shareholder value. The company expanded the total shareholder return (TSR)-linked compensation system, initially meant for key executives, to all executives this year. Additionally, Jeong has personally purchased company stocks worth 400 million KRW across four occasions since taking office, with other executives joining in.
Regarding the contested KakaoTalk revamp, she stated improvements would be made by actively incorporating user feedback. Jeong explained, “The September updates aimed to evolve KakaoTalk beyond a conversation-centered messenger into a relationship and context-based platform.” She announced plans to re-display the friend list and allow users to choose feed formats through separate menus or tab-in-tab formats by the fourth quarter of this year.