Kakao to launch conversational AI app within the year

[Courtesy of Kakao Corp.]

South Korean platform giant Kakao Corp. presented a business direction that focuses on KakaoTalk and artificial intelligence (AI) as future growth engines. The company is currently operating under an emergency management system amid the absence of its founder and chairman of the management reformation committee Kim Beom-su.

Kakao’s move is interpreted as a plan to create a mid-to long-term growth engine by weeding out non-core businesses to concentrate capabilities and resources on core businesses such as AI that will help future profitability.

“We defined KakaoTalk and AI as the core for Kakao’s future growth,” Kakao Chief Executive Officer of and co-chair of the Corporate Alignment (CA) Council Chung Shin-a said on Thursday during a second-quarter earnings conference call.

“We will allocate company-wide resources for the growth of the Kakao-based advertisement and commerce business and new innovation through AI from the second half of 2024 onwards.”

Kakao announced its plan to launch a new AI service on Thursday.

Chung noted that Kakao will introduce its first business-to-consumer (B2C) AI service in the second half of 2024. It will take the form of an interactive platform that is the company’s specialty and can be implemented easily. The name of the new service is yet to be decided, but it is presumed that it will be a form that will allow users to communicate with AI and use various functions.

“The service that we are currently developing will not be implemented within KakaoTalk but will be launched as a separate app,” Chung said.

The plan is to verify and improve the quality of the app via closed beta testing in the second half of 2024 and introduce the service to the market shortly afterwards.

Kakao believes that its strengths lie in its relationship-based communication technology and expertise that it accumulated through operating KakaoTalk. The company also hopes that it will be able to differentiate itself from its competitors by integrating Kakao services with AI.

Kakao reorganized related fields by establishing a new AI organization, Kanana, at its headquarters after absorbing Kakao Brain’s workforce in June 2024. Kanana is currently known to be working on several experimental projects, including an AI solution for open chat. It is therefore expected that various AI functions that Kakao has been preparing will be sequentially installed in core services such as KakaoTalk within the year.

“We plan to launch an AI service that users can access easily and explore possibilities for profitability rather than focusing on investing in the development of our own large language model,” Chung said.

With Kakao’s headquarters specifying key keywords for its future business, its overall non-core business reorganization is expected to accelerate. Chung confirmed that “businesses that are judged to lack business relevance to the KakaoTalk platform or AI will be defined as non-core” in response to a question regarding the sale of group affiliates or governance restructuring.

Meanwhile, Kakao posted record second-quarter sales and double-digit growth in operating profit. Its operating profit stood at 134 billion won ($97.5 million) for the second quarter of 2024, up 18.5 percent from the same period a year ago, while sales were up 4 percent to 2 trillion won.