Kakao to split major businesses to form new ‘AI core company’

Kakao said Friday it plans to split its major businesses, including its popular messenger service KakaoTalk, into two entities as part of efforts to strengthen its AI capabilities.

The plan to split the company into KakaoAI and KakaoX was approved at a board meeting, the company said in a regulatory filing.

Kakao plans to complete the spinoff by Jan. 1 next year, and relist KakaoAI on Jan. 27.

The newly created entity, KakaoAI, will oversee the company's popular messenger app KakaoTalk, with the goal of growing into an "AI core company" by connecting AI with advertising and commerce, the company said in a release.

The company said it plans to create new revenue models and aims to generate more than 6 trillion won ($4.3 billion) in sales at KakaoAI by 2030.

Kakao CEO Chung Shin-a will lead the new company.

The existing Kakao will be rebranded as KakaoX and serve as the investment arm for future growth engines. Kakao's mobile payment service, mobility platform and entertainment affiliates will remain under KakaoX, the company said.

Shareholders will receive shares in the new entities in proportion to their current stakes in Kakao, with a split ratio of 36:64 for KakaoAI and KakaoX, respectively.

Kakao said it has no plans to turn KakaoX into a holding company and that the two entities will operate independently.

Founder Kim Beom-su is expected to remain the largest shareholder of both companies while maintaining his current distance from management and governance, the company said.

Kim stepped down as chair of Kakao in 2023 and now serves as head of Kakao's Future Initiative Center.

The latest move from Kakao comes as the company has been seeking ways to accelerate investment in its growing consumer AI business amid intensifying global competition.

CEO Chung previously said the company was focusing on strengthening consumer-oriented AI services, such as agents, rather than entering the AI infrastructure hyperscaling market, including data centers.

The information technology company currently provides various everyday AI services centered around its proprietary Kanana AI models, integrated into its KakaoTalk messenger platform and other affiliated apps.

Last year, the company also partnered with OpenAI, allowing users to access ChatGPT through its messenger app.

Kakao's operating profit and sales reached record highs in the second quarter this year, helped by robust growth of its flagship platform business.

Yonhap