Kakao faces judicial risk ahead of Kakao AI’s release

[Photo by Yonhap]

South Korean platform giant Kakao Corp. is reconsidering its business roadmap, including the timing of its artificial intelligence (AI) service launch which is set for three months from now. This comes amid an unprecedented situation for the company following the founder’s arrest.

Kakao had announced preparations for various AI services based on KakaoTalk as its major priority business since the appointing of Chung Shin-a as chief executive officer (CEO) in March 2024.But with Kakao founder Kim Beom-su, who also chairs the Corporate Alignment (CA) Council, under investigation and detention due to allegations of involvement in market manipulation at SM Entertainment Co., the entire management is in a state of confusion.

According to multiple sources from the information technology industry on Wednesday, Kakao has tentatively confirmed the dates for its largest annual developer conference, “if kakao,” from October 22nd to 24th, 2024. Preparations for related projects are known to have been made at Kakao headquarters and its subsidiaries.

The event unveils various technologies from all group companies, including Kakao Mobility, Kakao Entertainment, Kakao Games, Kakao Pay, and Kakao Bank, allowing for an assessment of the group’s business vision and future direction. Kakao is known to have intended to present detailed plans for Kakao AI, including an open chat AI solution being developed by its AI dedicated organization, Kanana, at this event.

Kakao also had plans to sequentially integrate AI services into KakaoTalk and others around November to dispel market doubts, while integrating its AI specialized subsidiary Kakao Brain with its headquarters organization in July 2024.

But a high-ranking Kakao official, noted that Naevis, the virtual solo artist who combines AI, was scheduled to debut in the third quarter of 2024 in an AI event as revealed at the Aespa’s performance earlier in July 2024 but whether the event itself will take place is now uncertain.

As the situation with SM Entertainment escalates, Kakao’s ambitious AI plans could face significant disruptions. Multiple sources noted that there have been disagreements at the leadership level regarding the hosting of “if kakao” and the timing of service launches.

“At the operational level, we are preparing our business as planned,” a Kakao official said. “The biggest issue is the judicial risk due to Kim’s absence, and there has not yet been an agreement on whether it is appropriate to launch AI.”

Another official added that “the 2024 event is an important stage for showing the results that Kakao has prepared for the market since Chung Shin-a took office as CEO for the first time but there is a great deal of uncertainty due to external variables, so we are working our way through various agendas such as management normalization internally.”

Meanwhile, following its selection and concentration strategy, Kakao has been accelerating its service consolidation efforts in 2024. In the first half of the year alone, Kakao discontinued its mobile application service for KakaoTV and terminated the benefit accumulation reward-based advertising service on KakaoTalk in June.

Kakao also plans to terminate Oven, a development tool service, which has been provided free of charge for developers and designers to create web and app prototypes on September 30th. The company did not explain the reasons behind the termination, but the prevalent view is that Oven did not see a significant usage rate as other design tools became more popular.