Kakao has initiated a restructuring by separating its artificial intelligence (AI) and investment sectors. The company will transition to a system where 'KakaoAI' and 'KakaoX' focus on their respective business and investment operations. This move aims to enhance speed in the AI competition while addressing the undervaluation of its corporate value due to its conglomerate structure.
On August 21, Kakao held an online briefing to explain the rationale and future direction of the spin-off into KakaoAI and KakaoX.
During a board meeting earlier that day, Kakao resolved to proceed with the spin-off. The newly established KakaoAI will be led by CEO Jeong Sin-a, overseeing KakaoTalk and the AI, advertising, and commerce sectors. The existing entity, KakaoX, will be managed by CEO Kim Do-young, focusing on supporting the growth of tech-finance, content, and mobility subsidiaries, as well as new business investments.
Founder Kim Beom-soo conveyed to Kakao employees that, “The AI era demands a different level of agility, and we will redesign our growth structure with two engines: KakaoAI and KakaoX.”
While the business structure will be divided, Kakao plans to maintain collaboration between its platforms and subsidiaries under the principle of 'One Kakao.' After the spin-off, KakaoAI and KakaoX will operate independently, but organic collaboration with existing platforms and subsidiaries will continue.
Previously, in June, Kakao underwent an organizational restructuring led by CEO Jeong, who emphasized the need to unify under 'One Kakao' amid labor disputes and concerns over service strategies. This spin-off is seen as a measure to enhance the operational effectiveness of existing businesses before the implementation of the spin-off next year.
Kakao assessed that the burden of managing subsidiaries had diluted the management resources that should be directed toward its core business. Kim Do-young, the designated CEO of KakaoX (currently CEO of Kakao Investment), stated during the briefing, “Recently, there has been a growing demand in the market to commercialize AI B2C services and clarify business models within the next 2-3 years. However, a significant portion of Kakao's management resources has been spent on resolving subsidiary-related issues.”
According to Kakao, approximately 85% of the 23 major decisions made by the board in the past five years were related to subsidiaries. In the past year, 84% of the 32 internal investment review items were also related to subsidiaries.
KakaoAI aims to clarify its identity as an AI company and seeks a market reassessment. CEO Kim expressed concern, stating, “If we do not accelerate our AI business now, we risk missing a critical opportunity to become a leader in B2C AI services.”
Kakao has identified corporate value reassessment as a key goal of the spin-off. The company believes that the bundling of distinct businesses, such as AI platforms and tech-finance, content, and mobility, has led to a conglomerate discount. Kim noted, “In the past three months, Kakao's average market capitalization has been 16.8 trillion won, while the combined valuation of Kakao's individual business segments is estimated at 34.2 trillion won, indicating a more than 50% undervaluation.”
Kakao has also set ambitious targets for both entities by 2030. KakaoAI aims for over 20 million daily active users, more than 6 trillion won in revenue, and over 2 trillion won in EBITDA, with AI-related sales exceeding 1 trillion won. KakaoX plans to expand its revenue from tech-finance, content, and mobility sectors from approximately 5.6 trillion won in 2025 to over 10 trillion won by 2030, utilizing around 6.4 trillion won in investment resources from both the parent company and subsidiaries to explore new businesses in virtual assets, physical AI, and global fandom.
There will be no changes in the shareholding percentages of founder Kim Beom-soo and major shareholders like K Cube Holdings. Kakao stated that existing shareholders will receive shares in KakaoAI and KakaoX according to the spin-off ratio, maintaining their current ownership levels.
Meanwhile, prior to the announcement of the spin-off, there was a sense of tension within Kakao. The day before, at 6 p.m., Kakao informed employees about an open talk schedule, leading to various speculations about a transition to a holding company, a spin-off of the AI business, subsidiary sales, and even potential mergers of certain divisions with Naver.
However, following the disclosure of the restructuring details, the internal atmosphere reportedly stabilized. Most of the main business and personnel from KakaoTalk, commerce, AI, and advertising will transition to KakaoAI, effectively continuing the existing structure under the new entity. Kakao also confirmed that it will maintain the employment and working conditions of existing employees after the spin-off.
The Kakao labor union has expressed concerns over insufficient communication and has initiated a response in the form of 'joint negotiations.' The union claims it has not received official responses from management regarding the announcement details. The union stated, “As the decision-making structure becomes more complex after the spin-off, resolving practical issues through negotiations at the corporate level alone will be difficult.” They are demanding that the impact of the spin-off on employment and labor conditions at Kakao and its major subsidiaries be disclosed and discussed with the union before the extraordinary shareholders' meeting in December. A joint negotiation declaration ceremony involving Kakao and major subsidiary workers is scheduled for the 26th at Pangyo Station.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.