South Korean Tech Giant Kakao's Strategic Streamlining: Negotiates Transfer of Daum to AI Up-and-comer
According to South Korea's Seoul Economic Daily, Kakao, the country's internet giant, is in deep discussions with the leading local artificial intelligence startup, Upstage, to sell its portal website, Daum. The core asset of the negotiation is a company called AXZ, fully owned by Kakao, currently directly managing Daum's daily operations.
Sources reveal that the parties are discussing a highly strategic transaction model: Kakao might transfer all or most of AXZ's shares to Upstage through a stock swap. This indicates that Kakao does not plan to completely cash out of this business, but instead seeks to participate in the more advanced AI field by holding shares in Upstage as a 'technology investment.' If completed, this transaction will signify a major reshuffle in the South Korean internet landscape.
Leveraging Portal Data to Feed AI: Upstage's Strategic Sprint for Next Year's IPO
For Upstage, which is in a high-growth phase and preparing for its initial public offering (IPO) early next year, acquiring Daum is not just a simple expansion of scale. As South Korea's former second-largest portal, Daum possesses a vast amount of unstructured text data, search logs, and community content. In today's fierce AI competition, these high-quality, localized corpora are rare resources for training large language models (LLMs).
Upstage has been committed to developing high-performance open-source models, competing with international giants at the technical level. By gaining operational control of Daum, Upstage not only secures a stable cash flow and a mature traffic entry point but also gains direct access to abundant underlying data resources, driving its AI model iteration and commercialization. This undoubtedly will significantly boost its valuation potential at IPO, demonstrating to investors its complete narrative from foundational technology to application endpoints.
Streamlining Non-core Businesses: Kakao Accelerates "AI+KakaoTalk" Core Strategy
For Kakao, divesting Daum is an important step in its strategic plan to streamline its structure. Since the high-profile merger of Kakao and Daum in 2014, their integration has gradually faced challenges in the mobile internet era, with Daum's market share continually shrinking under the dual pressures of Naver and Google. In May this year, Kakao spun off Daum as an independent subsidiary, AXZ, signaling its intent to clear peripheral businesses.
Currently, Kakao's management has clearly positioned the company's future core focus on the deep integration of 'AI and KakaoTalk.' By selling the marginal portal business, Kakao can concentrate resources on strengthening its communication software platform attributes and reducing the management costs of bloated subsidiaries. Although Kakao had once denied rumors of the sale, partnering with cutting-edge technology firms like Upstage might be the best solution to revive the fading Daum in the fast-evolving AI competitive landscape.
