Kakao in discussion over turning 'Daum' web portal service into subsidiary through separation

By Park Sae-jin Posted : May 4, 2023, 13:52 Updated : May 4, 2023, 13:52

[Courtesy of Kakao]

SEOUL -- In a bid to increase flexibility and efficiency in decision-making processes, Kakao, South Korea's web service giant, is currently engaged in discussions over whether the company should turn "Daum," a web search portal platform division, into a company-in-company through separation.  
Daum was launched in 1995 and became South Korea's top web search portal in the late 1990s. However, the web search service operator was overtaken by Naver, a web portal service launched in 1999, in the early 2000s. Daum maintained its popularity through an online community platform called "Daum Cafe" that started service in 1999 but Naver soon caught up with its rival by beefing up the search features of "Naver Cafe," the counterpart of Daum Cafe.
The web search portal company became a division of Kakao when the smartphone messenger operator acquired Daum in 2014. According to Wiseapp, a smartphone app survey company, the number of Daum web portal smartphone app users continued to decrease to 8.1 million in January 2023, down 8.2 percent from 8.8 million in January 2022. Sales also decreased. Kakao's web portal business division sales stood at 97.9 billion won ($73.6 million) in the fourth quarter of 2022, down 25 percent from 4Q 2021.   
"We are at the stage where there are internal discussions taking place over whether we should transform Daum's business division into a company-in-company (CIC). We are to open a conference for employees and executives of Kakao and unveil our detailed plans for the operations of the CIC," a Kakao official told Aju Business Daily on May 3.
A CIC is a form of a subsidiary with an appointed CEO to ensure the management and control of the company. Kakao currently has a CIC under its wings -- the commerce CIC -- that became the web service giant's subsidiary in August 2022.
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