Kakao Explained

Kakao Corporation
Native Name:주식회사 카카오
Native Name Lang:ko
Romanized Name:RR

Jusikhoesa Kakao
MR: Chushikhoesa K'ak'ao

Type:Public
Foundation: (original company; as Kakao Inc.)
(current incarnation)
Founder:Brian Kim
Location:Jeju City, South Korea
Area Served:Worldwide
Key People:Brian Kim (founder)
(chairman, head of corporate alignment center)[1]
Eun-taek Hong (CEO)[2]
Industry:Internet
Revenue: KRW 4.16 trillion [3]
Net Income: KRW 167.1 billion
Num Employees:10,644
Subsid:Kakao Entertainment
Kakao Games
Kakao Friends
Kakao Mobility
Hangul:카카오
Rr:Kakao
Mr:K'ak'ao

Kakao Corporation (Korean: 카카오) is a South Korean Internet conglomerate headquartered in Jeju City. It was formed through the merger of Daum Communications and the original Kakao Inc in 2010. The company was renamed Daum Kakao in 2014.[4] In 2015 it was rebranded once more, reverting simply to Kakao.[5]

In May 2015, the company acquired Path, an American social media company that had become successful in Indonesia.[6] In January 2016, Kakao acquired a 76.4% stake in LOEN Entertainment, a large South Korean entertainment company, for $1.5 billion.[7] It was later rebranded as Kakao M. The company has gained further prominence from KakaoTalk, a free mobile instant messaging application for smartphones with text and call features. By May 2017, the app had 220 million registered users and 47 million active monthly users.[8]

As of March 2022, the company is competing with Naver Corporation for dominance in the Japanese web comic and web novel market.[9]

History

2006–2014: Founding of Kakao Corp.

Kakao Corp is the company behind KakaoTalk, which serves as its main platform and flagship application. It was founded in 2006 by Kim Bum-soo, the former CEO of NHN Corporation (the organization that emerged from the Hangame and Naver.com merger) as Kakao Inc.[10] Kakao Corp. (then known as Kakao Inc.) is based in Seoul, South Korea. Manson Yeo and Sean Joh serve as the current co-CEOs.[11]

In August 2013, three of globally ranked top 10 Android games (according to analytics provider App Annie) are tied into the KakaoTalk platform—Everybody’s Marble, Cookie Run, and Anipang.[12] [13] With 93 percent of South Korea's users on KakaoTalk, the free downloads of the games Ani Pang and Dragon Flight, which can only be played with a Kakao Talk account, were deemed "national" games. To maintain simplicity across all the provided services, Kakao applications can be purchased and logged in with links to KakaoTalk.[14] Kakao Corp generated revenue of approximately $200M (USD) in 2013 through gaming, digital content, mobile commerce, and its marketing channels for brands and celebrities.[15] Kakao Corp. was named a Top Developer on Google's Android Market, and KakaoTalk was chosen as the number one Free SMS App by Cnet.[16]

According to a December 2013 App Annie report, Kakao is the world's third top publisher by monthly revenue at Google Play. Kakao Corp. is the number one publisher for iOS and Google Play in South Korea, and KakaoTalk is the number one app for iOS and Google Play revenue in South Korea.[17] KakaoTalk was nominated for the Most Innovative Mobile App Award at the Global Mobile Awards 2014.[18] Kakao Corp. agreed to buy Daum Communications Corp, to cut costs and save time to jump-start growth and gain a listing in Seoul, South Korea.[19]

Kakao Corp's full suite of apps includes: KakaoTalk, KakaoStory, KakaoTaxi, KakaoAccount, KakaoMap, KakaoDriver, KakaoBus, KakaoMusic, KakaoGroup, KakaoHome, KakaoPlace, KakaoAlbum, KakaoPage, KakaoStyle, and KakaoAgit.[20]

2014–2015: Merger of Daum and Kakao

See also: Daum (web portal). On 26 May 2014, Kakao Corp. announced that it had decided to merge with Daum Communications, one of Korea's top Internet portals, through a stock swap. Once the two firms were combined the emergent company would have a market capitalization, enabling it to lodge a credible threat to Naver, which is South Korea's biggest web portal.[21] The new entity Daum Kakao was valued close to .

In 2015, the company changed its name to Kakao, restoring its pre-merger name. Due to gambling and censorship issues within the Kakao ecosystem, the organization's board of directors ejected Kim-beom-soo as CEO and decided to replace him with Rim Ji-hoon.[22] [23] [24] Kim Beom-soo become the largest shareholder in the new pro forma company with a 22.2 percent stake.[25]

2015–present: New business model

Internet bank

Kakao was approved by South Korean regulators to become the nation's first internet-only bank in 2017. The internet bank engages in the same business as commercial banks, including processing deposits, loans and wiring money. Consumers will no longer need to visit a bank to open a new bank account or to get a loan. Kakao's business plan was considered innovative, and the company's business model was expected to secure sizable customer sign-ups relatively easily, based on the users of KakaoTalk, which is the country's most popular messaging application.[26]

Although K Bank eventually became South Korea's first Internet-only bank having been launched several months prior, Kakao Bank immediately attracted more customers; 820,000 within four days of its launch on 27 July 2017.[27] The dedicated Kakao Bank app itself was downloaded 1.5 million times within the same period. The bank had 3.5 million customers after a month.[28] These figures trounced the 400,000 users that K-Bank amassed within 100 days of its existence.By 26 September 2017, Kakao Bank lent ₩1.4 trillion ($1.2 billion), constituting 40 percent of the total loans in all of South Korea for that particular month.[29] The bank's unprecedented expansion is seen as an exception to the closure of banks, particularly foreign-owned institutions. The fledgling performance for these banks is being blamed on the high cost of maintaining brick-and-mortar operations and the popularity of internet finance among Korean consumers.

Transportation services

On 10 March 2015, Daum Kakao launched their KakaoTaxi service that allows users to call a taxi using the KakaoTaxi application.[30] About 600,000 taxi-consumers used the ride-hailing platform every day within eight months of its launch.[31] [32]

In 2017, KakaoTaxi was renamed to Kakao T. The service includes the premium extension Kakao Taxi Black, which allows users to book rides in Seoul via the messenger app, exclusively carried in luxury cars such as Mercedes Benz, Lexus, and BMW. Fares for the premium service start at ₩8,000. Kakao announced plans to expand the offering to other Korean cities within the following year.[33] Kakao announced in April 2019 that they would be launching a e-bike sharing service with an initial fleet of 400 bikes across two major cities.[34]

2022 outage

After a massive outage in October 2022, the co-chief executive, Namkoong Whon, resigned. A fire at an SK C&C data center in the south of Seoul caused a mass outage over the weekend and disrupted several of Kakao’s services, including messenger, ride-hailing, payment, banking and gaming.[35] [36]

Arrest of Brian Kim

On July 16, 2024, the Seoul Southern District prosecutors’ office revealed that an arrest warrant was sought against Kakao founder and main owner Kim Beom-soo (Brian Kim) for charges related to price-rigging which took place during a bidding war over SM Entertainment Co.[37] Shortly after midnight on July 23, 2024, Kim was arrested after being criminally charged with stock manipulation.[38] [39]

Charity

In March 2022, amid 2022 Russian invasion of Ukraine, Kakao donated approx. $3.65 million worth of Klay cryptocurrency to UNICEF to battle the humanitarian crisis in Ukraine.[40] [41]

Services

Korea

Kakao provides a diverse set of services.

Community

Entertainment

Fashion

service, finding a nearby beauty salon

Finance

Investment

Transportation

Video games

Others

Japan

Kakao Japan Corporation is the Japanese subsidiary of Kakao. It currently offers some of Kakao's Korean services as well as specific ones for the Japanese market. Kakao Japan has announced plans to launch a music service in a second attempt to penetrate the Japanese market.[43] In April 2018, Kakao Japan announced plans to launch a video streaming service to compete against Netflix and Amazon with a similar pay model to their Piccoma service.[44] The streaming service will be called Piccoma TV.[45]

Controversy

KakaoTalk censorship

See main article: KakaoTalk. When the announcement by the Korean government that it would tighten its real-time monitoring to prevent people from spreading false information, the company cooperated fully by providing reams of conversation data. KakaoTalk users expressed their displeasure to the censorship saying that they would migrate to other messenger services. Because of this, as many as 1.5 million users are reported to have recently signed up for the mobile messenger service Telegram, which is known for its security.[46]

Daum Kakao has explained the censorship, saying, "It is unthinkable not to follow the rules in a constitutional country." "The move (by Daum Kakao) reflects users' repulsion and fear against cyber censorship", said Yoo Ki-hong, a spokesman of the main opposition New Politics Alliance for Democracy. "The government should understand the sense of resistance of the people on the issue, rather than justifying its execution of warrants."

Kakao Corp. chairman accused of gambling

Kakao board chairman Kim Beom-soo was accused of gambling in Las Vegas in the early years of Kakao Corp from 2007 to 2010. Overseas gambling is illegal under Korean law. Korean prosecutors have reportedly obtained information from the U.S. Department of Justice and the Department of Treasury that Kakao mobile messenger founder Kim had spent 20 hours and 51 minutes at the Bellagio Hotel in Las Vegas in 2007 when he served as NHN Global CEO. He bet an average of $2,440 per session and lost $16,993, Korean Hankook Ilbo newspaper reported.[47] The company decided to comply with the prosecution's warrants requesting monitoring of chatting records, a reversal from its earlier stance.

See also

References

32. Naver vs. Kakao: Way of working with startups. https://pickool.net/naver-vs-kakao-way-of-working-with-startups/

Notes and References

  1. Web site: Kakao to build large-scale K-pop performance venue in northern Seoul. Yoo, So-yeon. April 4, 2022. April 12, 2022. Korea JoongAng Daily. 25 December 2022. https://web.archive.org/web/20221225143901/https://koreajoongangdaily.joins.com/2022/04/04/business/tech/Kakao-Seoul-Arena-The-O2/20220404163256017.html. live.
  2. News: Korean Internet Giant Kakao's Co-CEO Resigns Amid Heat From Data Center Fire . . Catherine . Wang . 19 October 2022 . 27 October 2022 . 11 November 2022 . https://web.archive.org/web/20221111123553/https://www.forbes.com/sites/catherinewang/2022/10/19/korean-internet-giant-kakaos-co-ceo-resigns-amid-heat-from-data-center-fire/ . live .
  3. Web site: Earning Release 2021 . 13 February 2020 . ir.expediagroup.com . 23 April 2021 . 25 December 2022 . https://web.archive.org/web/20221225143902/https://www.kakaocorp.com/ir/referenceRoom/earningsAnnouncement?selectedYear=2021 . live .
  4. Web site: kakao > About > History . Kakao Corp. . Kakao . 9 October 2015 . dead . https://web.archive.org/web/20151001001748/http://www.kakaocorp.com/en/about/history . 1 October 2015 .
  5. News: 24 September 2015 . Daum Kakao Sets Sail Under New Name . . Seoul . 9 October 2015 . 1 October 2019 . https://web.archive.org/web/20191001004130/http://english.chosun.com/site/data/html_dir/2015/09/24/2015092401705.html . live .
  6. Web site: Path Sells Its Social Networking App To Daum Kakao. 29 May 2015. TechCrunch. 28 June 2015. Path became very popular in some Asian markets – most notably Indonesia, where most of its current active users are today.. 25 December 2022. https://web.archive.org/web/20221225143900/https://techcrunch.com/2015/05/28/path-sells-to-daum-kakao/. live.
  7. News: Kakao acquires Loen. 11 January 2016. The Korea Times. en. 18 September 2017. 30 September 2019. https://web.archive.org/web/20190930080254/http://www.koreatimes.co.kr/www/news/tech/2017/03/133_195188.html. live.
  8. Web site: Kakaotalk: number of monthly active users 2017 – Statistic. Statista. 5 March 2018. 25 December 2022. https://web.archive.org/web/20221225143902/https://www.statista.com/statistics/278846/kakaotalk-monthly-active-users-mau/. live.
  9. Web site: 2022-03-31 . Naver, Kakao competing for no 1 position in Japanese web comic market . 2022-04-26 . ThePrint . en-US . 25 April 2022 . https://web.archive.org/web/20220425130324/https://theprint.in/world/naver-kakao-competing-for-no-1-position-in-japanese-web-comic-market/896130/ . live .
  10. News: 아이위랩, 아이폰용 메신저 '카카오톡' 출시. https://web.archive.org/web/20131003130323/http://www.eto.co.kr/news/outview.asp?Code=20100318145504490&ts=233011. dead. 3 October 2013. Kim. Nam Kyu. 2010-03-18. Economy Today. 1 May 2013.
  11. Web site: Kakao. kakaocorp.com. ko-KR. 19 April 2018. 20 April 2018. https://web.archive.org/web/20180420073754/https://www.kakaocorp.com/ir/managementInformation/boardOfDirectors/configuration. live.
  12. Web site: Why is mobile gaming so popular in South Korea?. ACUÑA. ABEL. 19 October 2013. VentureBeat. 13 November 2016. 18 June 2018. https://web.archive.org/web/20180618102603/https://venturebeat.com/2013/10/19/why-is-mobile-gaming-so-popular-in-south-korea/. live.
  13. Web site: Willington . Peter . 'You can't crack Korea's top 10 without KakaoTalk': Yooii Studios on making a mark in Asia . pocketgamer.biz . 25 November 2013 . 25 October 2022 . 25 October 2022 . https://web.archive.org/web/20221025141005/https://www.pocketgamer.biz/asia/interview/55513/you-cant-crack-koreas-top-10-without-kakaotalk-yooii-studios-on-making-a-mark-in-asia/ . live .
  14. Web site: KakaoTalk, a Mobile Social Platform. KoreaMarketing.co=22 December 2013. https://web.archive.org/web/20161114084322/http://www.korea-marketing.com/kakaotalk-mobile-app-case-study/. 14 November 2016. dead. 19 May 2014.
  15. Web site: South Korea's Kakao Pushes Boundaries of Social Media. 26 February 2014. The Wall Street Journal. 21 April 2014. 21 September 2014. https://web.archive.org/web/20140921010509/http://online.wsj.com/news/articles/SB10001424052702304834704579405232330645204. live.
  16. Web site: Cnet's No.1 Free SMS app KakaoTalk. 26 September 2011. Cnet. 26 September 2011. 29 September 2011. https://web.archive.org/web/20110929131737/http://cnettv.cnet.com/free-sms-apps/9742-1_53-50112193.html. live.
  17. Web site: App Annie Index: Apps – LINE Tops the Revenue Rankings. 30 January 2014. AppAnnie. 20 April 2014. 15 September 2014. https://web.archive.org/web/20140915053251/http://blog.appannie.com/app-annie-index-apps-december-2013/. live.
  18. Web site: Korean Software Recognition. 3 February 2014. BusinessKorea. 19 May 2014. 1 July 2014. https://web.archive.org/web/20140701150137/http://businesskorea.co.kr/article/3135/korean-software-recognition-kakaotalk-nominated-mobile-innovative-mobile-app-award. dead.
  19. Web site: Kakao Corp Agrees to Buy Daum to Spur Growth, Gain Seoul Listing. 26 May 2014. Bloomberg. 19 May 2014. 26 May 2014. https://web.archive.org/web/20140526031847/http://www.bloomberg.com/news/2014-05-26/south-korea-s-kakao-corp-to-merge-with-daum-via-share-swap.html. live.
  20. Web site: Kakao Corp Home. 21 April 2014. Kakao. 19 April 2018. 8 September 2015. https://web.archive.org/web/20150908040036/http://www.kakao.com/. live.
  21. Web site: Daum, Kakao announce merger. 26 May 2014. The Korea Herald. 11 June 2014. 9 June 2014. https://web.archive.org/web/20140609150220/http://www.koreaherald.com/view.php?ud=20140526000085. live.
  22. News: Kakao Changes CEO, Name to Highlight Corporate Identity as Leader in Mobile Market. businesskorea. 24 September 2015. https://web.archive.org/web/20160112234729/http://www.businesskorea.co.kr/english/features/focus/12212-rebranding-kakao-changes-ceo-name-highlight-corporate-identity-leader-mobile. 12 January 2016. dead.
  23. News: Daum Kakao to change its name to Kakao. yonhapnews. 1 September 2015. 10 September 2015. https://web.archive.org/web/20150910010613/http://english.yonhapnews.co.kr/news/2015/09/01/0200000000AEN20150901005700320.html. live.
  24. Web site: Korea's Daum Kakao Brings in 34-Year-Old CEO To Grow Its Messaging Business Overseas. Russell. Jon. TechCrunch. 10 August 2015 . 1 January 2016. 1 January 2016. https://web.archive.org/web/20160101081010/http://techcrunch.com/2015/08/10/koreas-daum-kakao-brings-in-34-year-old-ceo-to-grow-its-messaging-business-overseas/. live.
  25. News: South Korean Messaging-App Maker Kakao to Buy Web Portal Daum. Lee. Min-Jeong. 2014-05-26. The Wall Street Journal. 2018-04-19. en-US. 0099-9660. 20 February 2018. https://web.archive.org/web/20180220092340/https://www.wsj.com/articles/south-korean-messaging-app-kakao-web-portal-daum-to-merge-1401067902. live.
  26. News: Kakao, KT Surge After South Korea Grants Online Banking Permits. bloomberg. 29 November 2015. 3 December 2015. https://web.archive.org/web/20151203101025/http://www.bloomberg.com/news/articles/2015-11-29/south-korea-grants-kakao-kt-led-groups-permits-for-online-banks. live.
  27. News: Kakao Bank attracts 820,000+ clients in four days since launch. FinTech Futures. 19 June 2018. en-gb. 20 June 2018. https://web.archive.org/web/20180620024322/https://www.bankingtech.com/2017/07/kakao-bank-attracts-820000-clients-in-four-days-since-launch/. dead.
  28. News: Kakao Bank: from 0 to 1,5 millions customers in just one week!. Ray. Stephane. 19 October 2017. 2018-06-19. en. 16 July 2022. https://web.archive.org/web/20220716213125/https://www.linkedin.com/pulse/kakao-bank-from-0-15-millions-customers-just-one-week-stephane-ray. live.
  29. Web site: South Korea web-only banks thrive as traditional lenders struggle. Song. Jung-a. 5 October 2017. Financial Times. 20 June 2018. 20 June 2018. https://web.archive.org/web/20180620024721/https://www.ft.com/content/438e8524-9f6a-11e7-8cd4-932067fbf946. live.
  30. Web site: Daum Kakao Debuts Uber Rival KakaoTaxi in South Korea. Shu. Catherine. TechCrunch. 31 March 2015 . 28 February 2017. 12 March 2017. https://web.archive.org/web/20170312071849/https://techcrunch.com/2015/03/30/kakaotaxi-launch/. live.
  31. Web site: Messaging app Kakao's taxi service already has 84% of Seoul's drivers signed up. The Drum. en. 28 February 2017. 1 March 2017. https://web.archive.org/web/20170301011057/http://www.thedrum.com/news/2016/02/25/messaging-app-kakao-s-taxi-service-already-has-84-seoul-s-drivers-signed. live.
  32. News: Kakao Taxi Draws 600,000 Requests per Day. Jin-young. Cho. 2015-12-17. BusinessKorea. 28 February 2017. en. 28 February 2017. https://web.archive.org/web/20170228171330/http://www.businesskorea.co.kr/english/news/industry/13322-new-taxi-service-kakao-taxi-draws-600000-requests-day. live.
  33. News: Kakao Launches Luxury Taxi Service. 4 November 2015. Chosun. 28 December 2015. 5 January 2016. https://web.archive.org/web/20160105234613/http://english.chosun.com/site/data/html_dir/2015/11/04/2015110401366.html. live.
  34. Web site: Tech in Asia – Connecting Asia's startup ecosystem . 9 April 2019 . 10 November 2019 . https://web.archive.org/web/20191110175841/https://www.techinasia.com/kakao-launches-ebike-sharing-service-south-korea . live .
  35. News: Kakao outage: Co-chief executive quits South Korea internet giant . 19 October 2022 . 19 October 2022 . . 19 October 2022 . https://web.archive.org/web/20221019060031/https://www.bbc.com/news/business-63310254 . live .
  36. Web site: Singh . Manish . 2022-10-19 . Kakao co-CEO resigns, company to invest over $300M to build data center after mass outage . 2022-10-19 . TechCrunch . en-US . 19 October 2022 . https://web.archive.org/web/20221019175536/https://techcrunch.com/2022/10/18/kakao-co-ceo-resigns-after-fire-incident-that-caused-mass-outage/ . live .
  37. News: Korea Seeks to Arrest Kakao Founder in Price-Rigging Case. Shinhye. Kang. Jenny Seung Min. Lee. Bloomberg News. July 16, 2024. July 23, 2024.
  38. News: Tech Star Arrested in Korea After $10 Billion Fall From Grace. Yoolim. Lee. Sohee. Kim. Bloomberg News. 2024-07-23. 2024-07-23.
  39. News: Founder of South Korean Tech Giant Kakao Arrested Over K-Pop Agency Deal. Kwanwoo. Jun. July 23, 2024.
  40. Web site: 카카오, 우크라이나 돕기 클레이 코인 300만개 기부…42억원 규모 . 2022-03-07 . . 4 March 2022 . ko . 7 March 2022 . https://web.archive.org/web/20220307115044/https://www.seoul.co.kr/news/newsView.php?id=20220304500140 . live .
  41. Web site: 2022-03-06 . Korean companies extend helping hand to Ukraine . 2022-03-07 . . en . 7 March 2022 . https://web.archive.org/web/20220307115042/https://www.koreatimes.co.kr/www/tech/2022/03/419_324998.html . live .
  42. Web site: Tech in Asia – Connecting Asia's startup ecosystem . 9 April 2019 . 3 October 2021 . https://web.archive.org/web/20211003213328/https://www.techinasia.com/kakao-launches-blockchain-platform-klaytn . live .
  43. Web site: Kakao readies Japan push with music and game content. The Nikkei. 20 February 2018. 3 October 2021. https://web.archive.org/web/20211003213331/https://asia.nikkei.com/Business/Companies/Kakao-readies-Japan-push-with-music-and-game-content. live.
  44. Web site: Kakao to launch video-streaming app in Japan. The Nikkei. 19 April 2018. 20 October 2021. https://web.archive.org/web/20211020074642/https://asia.nikkei.com/Business/Companies/Kakao-to-launch-video-streaming-app-in-Japan. live.
  45. Web site: Kakao to launch piccomaTV video streaming service this summer. telecompaper. 19 April 2018. 11 October 2021. https://web.archive.org/web/20211011171200/https://www.telecompaper.com/news/kakao-to-launch-piccomatv-video-streaming-service-this-summer--1240592. live.
  46. News: Daum Kakao in Serious Danger after "Censorship" Announcement. The Korea Economic Daily. 8 August 2014. 7 May 2015. https://web.archive.org/web/20150507062835/http://english.hankyung.com/news/apps/news.view?popup=0&nid=0&c1=&newscate=2&nkey=201410081210371. live.
  47. News: Kakao chairman again embroiled in gambling scandal. The Korea Herald. 11 October 2015. 16 October 2015. https://web.archive.org/web/20151016010151/http://www.koreaherald.com/view.php?ud=20151011000285. live.

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