[비즈한국] The first-generation portal 'Daum' is leaving Kakao035720 after 11 years. As AI startup Upstage begins preliminary procedures for the acquisition of Daum, the portal, which once wrote a 'venture myth' by leading the portal market in the early 2000s, is facing another inflection point.
Upstage and Kakao announced on the 29th that their respective boards of directors have approved the signing of a Memorandum of Understanding (MOU) for a stock exchange deal. AXZ, the operator of Daum, is a wholly-owned subsidiary of Kakao. The main point of this MOU is for Kakao to transfer its stake in AXZ to Upstage, while Kakao acquires a certain portion of Upstage's equity.
AXZ, which started as an internal independent corporation (CIC) under Kakao, was spun off as a subsidiary in May last year through a physical division. Subsequently, on December 1st of last year, Kakao transferred the operations of Daum to AXZ. Accordingly, it is known that AXZ has been effectively managing the overall operations of Daum's services, including news, shopping, email, search, and cafes.
Founded in 1995, Daum grew rapidly after launching the free email service 'Hanmail' two years later. It then expanded its user base through cafes, news, and search, establishing itself as a key pillar of the domestic portal market. Following the merger with Kakao in 2014 and the launch of the integrated entity 'Daum Kakao,' the portal's weight within the group gradually diminished according to business strategy. It has currently fallen to fourth place in the portal market, lagging even behind Microsoft's Bing.
This MOU is being evaluated as a 'win-win strategy' where Kakao alleviates the burden of its underperforming portal business, and Upstage secures a powerful platform and data. In the IT industry, there have been observations that Kakao had begun the process of phasing out the business ever since it spun off Daum. With this, Kakao is effectively parting ways with Daum 11 years after absorbing and merging Daum Communications in 2014.
In a press release issued that day, Upstage explained that the two companies reached this agreement based on the necessity for developing new AI-based services and their confidence in creating effectiveness.
Upstage plans to enhance its AI technology capabilities based on the vast content data possessed by Daum. The diverse text data owned by Daum, including news, cafes, and Tistory, can serve as a major resource for advancing AI models.
Once a leader in the portal market, Daum has suffered from declining market share and falling revenue in the mobile era. Attention is now focused on whether it can restore its presence by meeting Upstage's technology.
Upstage, one of the elite teams in the government-led 'Independent AI Foundation Model' project, has excellent technology but has been pointed out to have a limitation in lacking a platform to practically service its AI. Upstage explained that it proposed the collaboration to AXZ, which holds a broad user base and rich content data, while looking for business expansion opportunities based on its Large Language Model (LLM) 'Solar'.
Upstage CEO Kim Sung-hoon expressed his thirst for securing data at a conference hosted by the Ministry of Science and ICT last February, telling the government, "I wish you would break new ground and open up data in Korea without worries about copyright." There is an expectation that being able to utilize the portal archive accumulated over 30 years for training could be a decisive factor in instantly narrowing the technological gap.
The acquisition of Daum is also seen as an important momentum for the IPO that is currently being pursued. If the deal is finalized after the main due diligence following the MOU, the company plans to start building a next-generation AI platform that combines Solar and Daum services.
With the sale of AXZ, Kakao has secured the conditions to focus on its core revenue source, KakaoTalk, and its AI business, which it has designated as a future growth engine. Furthermore, by acquiring a stake in Upstage, it can also aim for future investment profits. There is even talk of the possibility of pursuing technical cooperation between its own AI brand 'Kanana' and Upstage.
Upstage CEO Kim Sung-hoon stated, "When Upstage's AI technology is combined with Daum, which has a nationwide user base, an environment has been created where more users can easily and naturally utilize AI." AXZ CEO Yang Joo-il also noted, "Through the synergy between the two companies, we will be able to introduce new AI services with speed."