Naver has solidified its status as a "first-class corporation" by surpassing 10 trillion won in annual revenue for the first time last year and seeing many former employees appointed to key positions in the Lee Jae-myung administration. Naver is also being highlighted as a leading company to spearhead the government's "sovereign AI" policy, which has reportedly placed additional pressure on Lee Hae-jin, the company's founder and chairman. However, the growing perception of a cozy relationship with the administration seems to be a challenge that Naver needs to address.
◇ Minister·Chief advisor double honor… Naver rising as a "first-class corporation"
According to the National Assembly and industry sources on the 18th, Han Seong-suk, the candidate for Minister of Small and Medium Enterprises and Startups, is awaiting the adoption of the personnel hearing report after completing the confirmation hearing on the 16th. Han served as CEO of Naver from 2017 to 2022 and has been serving as an advisor at Naver until recently. Choi Hwi-young, the representative of Now Universe, who was nominated as the Minister of Culture, Sports and Tourism on the 11th, also has a background as CEO of NHN, Naver's predecessor, for two years from 2007 to 2009. Last month, Ha Jung-woo, the former head of Naver Cloud's AI Innovation Center, was appointed as the chief advisor for AI future planning at the Presidential Office, which plays a control tower role in establishing national AI strategy.
This means that Naver alumni have been appointed to all key positions, including the Minister of Small and Medium Enterprises and Startups overseeing small business and small merchants, and the Minister of Culture, Sports and Tourism directing cultural content policy, as well as the control tower tasked with developing national AI strategy. Naver is engaged in AI and content businesses, and also provides an online sales platform to small and medium enterprises and small merchants through its smart store.
Since the inception of the Lee Jae-myung administration, Naver's status has changed dramatically with the continuous appointments of Naver alumni to key positions. Having started as a venture company in 1997, Naver is now recognized as a bona fide first-class corporation. An industry insider remarked, "It has been proven that hard work at Naver can lead to top government positions," adding that "the company's status has risen differently than in the past." Naver surpassed the annual revenue of 10 trillion won for the first time in its history last year and received approval for membership in The Federation of Korean Industries this year. In 2021, it was designated as a conglomerate after surpassing 10 trillion won in total assets.
◇ Heavy burden on Lee Hae-jin after a four-month return
Since returning to the chairman position in March this year, the burden on Lee Hae-jin, the founder of Naver, as the head of the company has increased. As the company's status has risen, internal and external pressures such as social scrutiny and checks are expected to intensify. Furthermore, for Lee, who was abruptly announced to resign from the chairmanship and left the board in 2017, the public attention may be uncomfortable. Reports suggest that during a meeting with former Fair Trade Commission Chairman Kim Sang-jo back in 2017, he convinced them that Naver was a "large corporation without a head" by highlighting that his ownership interest was only around 4% and that family members did not participate in the management of the company. However, this reasoning was not accepted.
Lee has not held the CEO position even once since Naver was spun off from NHN in 2013. Some in the industry view this as his intention to distance himself from the image of a chaebol leader. Since being designated as the head, he has steadily sold off his equity, and now his ownership in Naver has fallen to around 3%. Although he is the third-largest shareholder after National Pension Service (9.16%) and BlackRock (6.05%), he is subject to regulations as the head of the company. The head is required to disclose various information such as the status of subsidiaries, ownership equity, and the business status of family members, and failure to report accurately or omitting information may lead to a prison sentence of up to two years or a fine of up to 150 million won.
◇ Burden of external perception of a close relationship with the government
Naver is undoubtedly the leading company to spearhead the sovereign AI emphasized by the Lee Jae-myung administration. It possesses the best technological capabilities in the country and is expected to benefit from collaboration with the government. However, this may pose a burden for Lee, who has managed the company while keeping a distance from politics. An industry source noted, "Regardless of the chairman's will, many Naver alumni have been appointed to key positions, and the company is now in a situation where it needs to cooperate with the current government's policy initiatives," adding that "although the chairman's management philosophy has not changed, external perception seems to now view the company as having a close relationship with the government."
In the past, there were instances where ministers from corporate backgrounds were appointed, raising suspicions of a cozy relationship with the government. Samsung was one such case during the participatory government era. In 2003, when the Roh Moo-hyun administration was launched, Jin Dae-je, former president of Samsung Electronics, was appointed as the Minister of Information and Communication. In 2005, Lee An-oh, a former executive from Samsung Economic Research Institute, was brought on as the chief director of the National Intelligence Service. It is also said that the Presidential Transition Committee formed in February 2003 ahead of the launch of the Roh Moo-hyun administration requested Samsung Economic Research Institute to draft a report titled "Agenda on National Tasks and Governance," which served as the basis for the participatory government to set its policy direction.
Kim Kyung-won, a chair professor at Sejong University, stated, "A cozy relationship with the government is like eating a poisoned apple. It may fill you up at first, but over time the poison spreads throughout the body." He added, "Samsung, which has a large share of global business, did not request much from the Korean government because the carrots they could receive were small and maintained the stance of being left alone to focus solely on corporate management. In contrast, Naver, with a significant portion of its business in Korea, has much to gain from government carrots. However, one must be aware that there may be future costs to pay."