Kakao said it will replace the existing search feature in KakaoTalk (hereafter KakaoTalk) chat rooms—where pressing the hash (#) button consolidates to the Daum search bar—with the artificial intelligence (AI) agent "Kanana" search. But there are considerable concerns that if the existing Talk search feature, which had funneled users to the Daum site through KakaoTalk, is removed, Daum's search market share—already struggling against Naver, Google, and Microsoft (MS)—will fall even further.
According to Kakao and the industry on the 30th, Kakao decided to switch KakaoTalk's hash search from "Daum" to "Kanana" within the year. Hash search is a search function that Kakao, which completed its merger with the Daum portal in 2014, integrated into KakaoTalk in 2015 to boost synergy between the two companies' businesses.
A platform industry official said, "For the first time in 10 years, the business touchpoints between KakaoTalk and the Daum portal will effectively disappear," adding, "With the removal of hash search, the Daum portal's traffic share, which has been struggling, is expected to decline further." The industry sees it as only a matter of time before the Daum portal's search engine market share falls below 2%. According to the web log analysis site "Internet Trend," as of June this year, domestic search engine market shares were Naver (57.82%), Google (34.04%), MS (4.19%), and Daum (2.87%).
Daum is among the slowest to adopt AI features among domestic search engines. While Naver, Google, and MS are all seeking differentiation with services that integrate AI features into their search engines, only Daum has yet to introduce AI search features. In this situation, eliminating even the KakaoTalk hash search linkage that accounted for a significant portion of Daum's search share is seen in the industry as not helping at all to expand Daum's market share. That is why some are saying Kakao may have given up on expanding its influence in the search market.
As Kakao moves to reduce business touchpoints with Daum, speculation over a potential sale of Daum is resurfacing inside and outside the industry. Rumors of a Daum sale had once subsided when Kakao CEO Chung Shina said in March, "We are not considering the sale of the portal 'Daum' at this time." A portal industry official said, "If Daum is spun off and its business touchpoints with Kakao weaken, a future sale will be easier," adding, "We expect a sale could be decided even without a shareholders' meeting resolution." Under current law (the Commercial Act), if an item is not an important asset, a sale is possible with only a board resolution or the CEO's delegated authority. According to the legal community, when the target of the sale is small in scale or does not materially affect the company's overall operations or finances, it is recognized as not being an important asset.
In May, Kakao spun off the content company-in-company (CIC) in charge of the Daum portal to the outside and established a new corporation named "AXG." Kakao plans to complete the transfer of business divisions such as Daum News, Daum Shopping, Daum Search, Daum Mail, and Daum Cafe to AXG on Dec. 1. The transfer of Daum business rights is scheduled to proceed without a shareholders' meeting resolution. Kakao's semiannual report explains the reason by stating, "Because it is not a significant transfer of business as defined in Article 374 of the Commercial Act, a shareholders' meeting resolution is not required."
Kim Kyung-won, a distinguished professor in the Department of Business Administration at Sejong University, said, "Due to the amendment to the Commercial Act, from Jul. 22 this year, if a director pursues a sale that runs counter to shareholder interests, it constitutes a legal breach of the duty of loyalty to shareholders," explaining, "This is why Kakao's move to reduce business touchpoints with Daum raises the possibility of a sale."