[비즈한국] Kakao035720, which has entered "speed mode" to slim down under CEO Chung Shin-a, will reduce its number of affiliates to about 80 by the end of this year. The company is pruning businesses such as metaverse and gaming while focusing on strengthening its fundamentals around AI. Meanwhile, Naver035420 liquidated one overseas subsidiary in the first half of this year but expanded its overall business structure by incorporating eight new affiliates. After partially reducing its affiliates last year, the company is now diversifying its growth axes again. With the two companies’ restructuring directions divided into "choice and focus" versus "expansion and investment" regarding their next steps for growth, attention is focused on whether their respective strategies will succeed.
Affiliates Reduced by 30% in a Year and a Half Since CEO Chung Shin-a Took Office
Throughout this year, Kakao continued its "affiliate diet." According to data from the Korea Fair Trade Commission (KFTC) on business groups subject to disclosure and information from Kakao, the number of affiliates, which stood at 132 in March last year, entered the double digits at 99 as of October this year. Having faced criticism for encroaching on local commercial districts through reckless business expansion, Kakao began full-scale affiliate cleanup after CEO Chung took office last year. This figure represents a 25% reduction in total affiliates over a year and a half, following a decrease to 115 (a reduction of about 13%) by March of this year, just one year after she took office. Compared to September 2023 (142 affiliates), when CEO Chung took office as head of business, the number has dropped by 30%.
Based on KFTC standards, the number also showed a downward trend from 128 at the end of 2023 to 115 at the end of last year. The plan is to leave only about 80 affiliates by the end of this year.
It is known that Kakao’s internal improvement is being driven by the CA Council, the group's control tower, based on the relevance to the core business. Recently, Kakao Games293490 completed the sale of a 39.4% stake in its subsidiary Neptune to Krafton259960 for 165 billion won. Neptune and its nine affiliates have been removed from Kakao. The metaverse sector, which was once touted as a new growth engine but has since seen its competitiveness weaken, is also being phased out.
Kakao is accelerating the expansion of its AI ecosystem by incorporating AI capabilities into its core businesses. While expanding its own AI applications, it has also begun strengthening related services, such as enabling direct AI usage within the KakaoTalk chat app through "ChatGPT for Kakao," co-developed with OpenAI.
In a shareholder letter released on the 13th of last month detailing plans to strengthen responsible management, CEO Chung Shin-a emphasized, "Over the past year and a half, Kakao has swiftly restructured the group's governance and simultaneously pursued company-wide cost efficiency to prepare a financial structure capable of focusing on future growth."
From Proptech to Fintech: Will Naver’s ‘Expansionary Growth’ Succeed?
Naver has shown a trend of expanding its business base again this year. According to filings, while the company liquidated the Australian subsidiary of the overseas secondhand trading platform Poshmark in the first half of this year, it incorporated eight new affiliates, resulting in a net increase of seven companies in the total number of affiliates compared to the end of last year. Naver had previously reduced its total from 103 affiliates to 82 last year by liquidating 23 and adding two. Based on KFTC standards, the number decreased from 54 at the end of 2023 to 45 at the end of last year.
Looking at the changes in Naver’s affiliates, the strengthening of platform capabilities through portfolio expansion stands out. Representative of this is the July acquisition of the real estate platform 'Asil,' which is considered an attempt to combine real estate data with financial services. Asil is a big-data-based platform that provides various real estate data, including apartment listings and trends in listing fluctuations.
Three companies related to Asil joined Naver Pay; at the time of the acquisition, Asil was a capital-impaired company with a net debt of 1.13 billion won. The acquisition price paid by Naver was 25.4 billion won. It is evaluated that Naver Pay utilized the potential value of Asil, which possesses its own real estate data analysis technology, as a new growth foothold in the proptech sector.
In addition, companies such as 'Yanolja F&B Solution,' a digital solution firm for the food service industry, and 'Naver Ventures Management,' a venture investment fund and manager for overseas startup investments, have been added, highlighting a direction of broadening its character as a tech ecosystem hub. Newly connected entities also include 'Kream Pay,' a simple payment subsidiary of Naver Kream; a corporate entity overseeing Middle Eastern operations; and Purple Duck, a content IP-based marketing firm.
Naver is pursuing a merger with Dunamu, which operates Upbit, the No. 1 cryptocurrency exchange in South Korea. If the big deal, valued at approximately 20 trillion won, is completed, there are predictions that Naver, having absorbed fintech infrastructure, will emerge as a major pillar in the digital asset market.
Having achieved results in the third quarter of this year by applying AI to search and shopping, Naver plans to introduce a shopping AI agent in the first half of next year, follow up with vertical AI agents, and launch a new AI tab capable of comprehensive generative search. It has presented a roadmap to evolve into an integrated agent connected with both internal and external Naver ecosystems.
As AI-powered personalized recommendations have strengthened, the commerce division, which includes Naver Shopping, recorded 985.5 billion won in revenue for the third quarter, a 35.9% increase compared to the previous year. Lee Jun-ho, a researcher at Hana Securities, evaluated, "The strengths in AI and stablecoins have become visible through commercialization and institutionalization," adding, "Naver's competitiveness in digital assets is also overwhelming due to its collaboration with Dunamu."