New business loses momentum due to judicial risk
Talk advertising and overseas expansion with SM Entertainment are also unclear.
Representative Hong Eun-taek appears as a witness at the National Assembly Industrial and Self-Government Committee on the 27th.
Kim Il-doo, CEO (at the time) of Kakao’s AI research and development subsidiary Kakao Brain, unveils its mega AI model ‘KoGPT (Cozy PT)’ at the developer conference ‘IfKakao2021’ held in November 2021. [사진 출처 = 카카오]
As the level of pressure from supervisory and investigative authorities on Kakao is increasing day by day, the generative artificial intelligence (AI) business, which is a key axis of Kakao’s future business, is also feeling put on hold.
Kakao announced plans to release a version of its large-scale AI model ‘CoGPT 2.0’ within the year and sequentially release a service lineup tailored to it, but it was found on the 25th that the current business progress is slow. Currently, public interest in AI has somewhat waned, and the decline in market trust due to the recent judicial risk looming over Kakao is acting as a decisive blow.
Kakao said, “There has been no change as of yet regarding the timing of releasing the Large-Scale Language Model (LLM) and the direction of the business, which we announced would be released within the year.” However, he did not deny that a somewhat different mood was being sensed as the external situation was rapidly changing day by day and internal differences of opinion were gradually emerging as to whether it was right to release AI, which is considered a major business of Kakao, this year.
At 1:40 am on the 24th, Kakao founder Kim Beom-soo is leaving the Financial Supervisory Service in Yeongdeungpo-gu, Seoul, after being investigated by the Financial Supervisory Service’s Capital Market Special Judicial Police (Special Investigation Police) for 15 hours and 40 minutes. [사진 출처 = 연합뉴스]
A Kakao official said, “In any case, the goal is to release a model within the year, and the specific services related to it are going from the idea stage to actual implementation, and we are looking at a good time to release it, such as next year.” At the same time, he said, “There may be changes to these plans depending on future circumstances.”
Even before the global generative AI craze broke out when Open AI’s ChatGPT came out, the AI business was the business of Kakao Brain, Kakao’s AI subsidiary. This is because there are more variables to consider.
For example, the AI service that Kakao has in mind is not only in the form of an AI chatbot linked to KakaoTalk, but also an AI lineup at the Kakao community level such as commerce, mobility, and finance is being drawn, taking into account the unstable situation that Kakao experienced as its ‘mother’. The analysis is that it cannot be avoided.
An industry official familiar with Kakao’s situation said, “The market’s expectations for AI models have already risen, so there is a burden of having to meet the expectations.” He added, “In particular, the suspicion of market manipulation that arose during Kakao’s acquisition of SM Entertainment is affecting the group as a whole. “As it is acting as a judicial risk that shakes the government, the AI business is somewhat pushed to a lower priority in the decision-making structure at the community level due to governance issues,” he said.
Talk Biz (advertising, etc.) related to KakaoTalk messenger, Kakao’s core business, also appears to be struggling. This is why securities companies have recently been lowering their performance forecasts for Kakao.
Kang Seok-oh, a senior researcher in the corporate analysis department at Shinhan Investment & Securities, said, “In the case of Kakao’s Talk Biz business, single-digit growth is expected as the impact of the economic downturn continues.” He added, “We are revamping the friend tab and open chat tab UI (user interface) and functions. “It is still in progress, but it is judged to be too early to expect meaningful related sales or traffic,” he said. In addition, the expansion and strengthening of various forms of advertising business on KakaoTalk to drive Kakao’s performance is also leading to increased user fatigue, which is cited as a representative issue that the company must solve.
In addition, the overseas business linkage project between Kakao Entertainment and SM Entertainment appears to have lost momentum. SM Entertainment is an opportunity for Kakao to increase overseas sales, but internal voices are saying that related businesses will not be able to begin in earnest until this situation is over.
Meanwhile, Kakao CEO Hong Eun-taek is scheduled to appear as a witness regarding suspicions of technology infringement by startups such as Kakao VX, Kakao Healthcare, and Kakao Mobility at the comprehensive audit of the National Assembly’s Trade, Industry, Energy, Small and Medium Venture Business Committee (CTC) to be held on the 27th.
