Kakao spoke up after failing the first evaluation of the 'reader artificial intelligence (AI) foundation model' development project. Until now, Kakao has focused on enhancing service capabilities based on cooperation with OpenAI, the developer of ChatGPT, rather than developing its own AI technology. There are concerns in the industry that the absence of Kakao's own AI technology has ultimately hindered its progress.
Chung Shina, the CEO of Kakao, emphasized during the conference call following the performance announcement for the second quarter of 2025 on the 7th that the company's current strategy aligns with the 'AI for everyone' concept emphasized by the Lee Jae-myung administration. This is interpreted as an effort to quell market fears that the failure to secure the 'national representative AI' has caused friction with the Lee Jae-myung government. President Lee has underscored the importance of establishing an 'AI basic society' that allows all citizens to use generative AI for free since his candidacy in the presidential election.
The government recently selected five elite teams (Naver Cloud, SK Telecom, LG AI Research Institute, NC AI, and Upstage) for the project to create a 'national representative AI model.' The selected consortiums will receive a total of 200 billion won in government support, which includes high-performance graphic processing units (GPUs), data, and labor costs. They can also use the designation of K (Korean)-AI enterprises. The Ministry of Science and ICT, which is overseeing this project, will conduct competitive evaluations among the five elite teams to narrow down the development entities to 1 or 2.
As a 'domestic representative big tech' company, Kakao faced market concerns that it is 'unable to properly respond to the AI era' after failing the first evaluation of the project. CEO Chung noted regarding the failure to be selected among the elite teams, 'I believe that the direction of sovereign AI that the government has recently mentioned and Kakao's AI strategy ultimately converge into one direction,' adding, 'I see it aligning with the goal of providing AI as a service that is accessible to everyone.'
◇"Kakao will contribute to revitalizing the domestic AI ecosystem with its technology"
Kakao is also emphasizing that it is not just focusing on model development but is concentrating on sovereign AI as a service in line with government policy. CEO Chung emphasized, 'Even at this moment, global AI services are rapidly absorbing user experiences and engagement,' adding, 'Kakao is pursuing a strategy of quickly adopting advanced technology and integrating it into domestic services.'
He stated, 'As Kakao's AI model becomes more sophisticated, we aim to integrate it with various external collaborative services and internal services, contributing to the revitalization of the domestic AI ecosystem and securing technological sovereignty,' and added, 'We will work together to innovate the daily lives of citizens through AI and transition into a faster AI-based society.'
CEO Chung specified that Kakao plans to expand its AI ecosystem centered on KakaoTalk and its self-developed lightweight model. He mentioned, 'We are continuing to invest in language models that specialize in service-oriented AI agents,' stating, 'Starting in the second half of this year, we will launch several AI services using the lightweight model, with KakaoTalk as the focal point.'
He added, 'We will officially begin to expand the agency AI ecosystem so that users can experience AI services in their daily lives,' explaining that 'Kakao will pursue a strategy of continuous collaboration with external partners and internal independence, which has been repeatedly emphasized.'
◇"No conflict between ChatGPT-based services and self-developed functions"
Kakao plans to integrate all its AI-related areas under the name 'Canana.' In conjunction with this, it has entered into a strategic partnership with OpenAI and has been co-developing AI agents since February. This has led to concerns in the market that even if Kakao develops new AI services, it may conflict with existing services like ChatGPT, KakaoTalk, and Canana, potentially undermining competitiveness.
In response to these concerns, CEO Chung stated, '(The collaboration with OpenAI) will be more about expanding the user base rather than cannibalization,' and explained, '50 million users each have different levels of understanding and acceptance of AI. Achieving this goal may be somewhat challenging with just one service.'
He continued, 'I believe there are many users who have not had any experience with AI services until now,' adding, 'Both companies are currently focused on optimizing user experience and are closely collaborating to provide services that are as widely accessible as possible,' stating that, 'Just as ChatGPT offers free features, Kakao will also strive to allow users to utilize AI freely and comfortably, aiming to instill new forms of user behavior within the ecosystem.'
Kakao announced that its operating profit for the second quarter of this year, based on consolidation, was 185.9 billion won, marking a 39% increase compared to the same period last year. Revenue reached 2.0283 trillion won, a 1% increase compared to the same period last year. The operating profit margin was 9.16%. During this period, operating expenses were recorded at 1.8842 trillion won, a 2% decrease compared to the same period last year.
Kakao achieved the highest quarterly revenue and operating profit to date in the second quarter of this year. The analysis suggests that the strong performance was driven by balanced growth across all business sectors except for the content division. Kakao plans to sequentially launch new AI services to continue its performance growth.