After announcing a collaboration with OpenAI, Kakao is accelerating development of artificial intelligence (AI) services and is reported to have increased its research and development (R&D) expense last year. This is interpreted as preparation to apply AI to major services such as KakaoTalk and gift-giving. In contrast, Naver is reported to have decreased its R&D expense last year. It appears to be consolidating non-core businesses, such as the metaverse platform Zepeto, and focusing resources on its commerce business.
According to announcements from each company on the 19th, Kakao invested 1.2696 trillion won in R&D expense last year, an increase of 3.8% compared to the previous year. The proportion of this expense relative to revenue was 16.1%, maintaining a similar level to the previous year's 16.2%. Kakao is currently developing technology that analyzes video context based on deep learning to maintain image quality while compressing data, along with enhancing the customer channel home building system in its business messaging service 'TalkBiz.' Last month, it was confirmed that Kakao added an automatic gift-giving service function to OpenAI's AI assistant service 'Operator.'
During the same period, Naver's R&D expense was 1.8579 trillion won, a decrease of 6.8% compared to the previous year. The number of research and development achievements has also shown a downward trend. In 2020, Naver conducted 50 R&D projects, but this number fell to 30 last year. Naver is developing technology that automatically classifies reviews for specific locations and drafts responses using its in-house AI model HyperClovaX, as well as technology that automatically generates promotional short forms.
Despite a decline in performance in the fourth quarter of last year, Kakao is focusing its R&D investment on major businesses. In the fourth quarter of last year, Kakao reported revenues of 1.9591 trillion won and an operating profit of 106.7 billion won, reflecting a decrease of 2% and 33.7%, respectively, compared to the same period the previous year. Analysts attribute the decline in performance to the 'Tymap incident.'
Kakao aims for a rebound in performance by applying AI to its major services. The platform sector, which includes KakaoTalk and gift-giving services, accounted for 49.6% of total revenue last year. Jeong Sin-a, CEO of Kakao, noted during a joint press conference with OpenAI last month that the AI agent service implemented in KakaoTalk will become even more unique in Kakao's style.
In contrast, Naver is taking a cautious approach to executing R&D investments while downsizing non-core businesses. Recently, Naver transferred part of its equity in its subsidiary Naver Z, which operates the metaverse platform Zepeto, to SoftBank. This transaction suggests that the R&D expense for Zepeto will now be borne by SoftBank, leading to a reduction in overall expenses.
Naver is currently focusing resources on its main revenue source: commerce. Last year, Naver's marketing expense for commerce and fintech amounted to 1.5994 trillion won, which is an 8.1% increase compared to the previous year.
Last year, Naver actively sought to hire for commerce technology and service roles. According to last year's figures, Naver's number of employees increased by 4.6% to 4,583, and total compensation rose by 11.9% to 582.5 billion won. This represents a larger increase compared to Kakao, which saw an employee increase of 3.8% to 4,028 and a total compensation increase of 3.4% to 409.5 billion won during the same period.
Chae Hyo-geun, vice president of the IT Service Industry Association, said, 'It seems that as Naver and Kakao adopt different AI strategies, the fluctuations in R&D expenses are also showing differences.'