Kakao failed to make the cut in the government-led selection of five elite teams for an "independent artificial intelligence (AI) foundation model" project in Aug. last year. Then in Sept. last year, it carried out a sweeping overhaul of "KakaoTalk," but moved to restore it after user backlash. The national messenger "KakaoTalk" ceded its No. 1 app spot in Korea to YouTube, and the AI business has lost its way. ChosunBiz diagnoses the structural problems Kakao currently faces. [Editor's note]
"On the org chart, Sina (Chung Shin-a, Kakao CEO) is the chair of the CA Council (Kakao Group control tower) and Kakao's CEO, but in reality, Team Hwang (Hwang Tae-seon, CA Council chief representative) is the most powerful figure inside Kakao." (Kakao executive A)
"After seizing power, Team Hwang cut off communication between executives and Brian (Kakao founder Kim Beom-su and head of the Future Initiative Center). If executives get caught trying to have a one-on-one, they fall out of Team Hwang's favor. It feels like the company has become Team Hwang's playground." (Kakao employee B)
On July 23, 2024, Kakao founder Kim Beom-su was jailed on suspicion of price rigging in SM Entertainment shares. Kakao said that day it was "discussing countermeasures centered on co-chair Chung Shin-a of the CA Council and will do our best to minimize any management vacuum." But in the absence of the founder, the apex of power at Kakao, ironically, was not CEO Chung but chief representative Hwang Tae-seon.
After controversy that the CA Council had become an "overseer above overseers" with excessive authority, it announced an organizational overhaul on the 23rd of this month, but inside Kakao critics say it is "a failed reform that left people in place and only changed the structure, with the shadow power intact." Kakao employee C said, "It's frustrating that Sina cannot exert strength in the current structure where Team Hwang holds power," adding, "Sina has never led an organization of thousands and, as an outsider, is busy just tending to Kakao and adjusting."
◇ A former chief of staff rises as the real power in the founder's absence
Kakao's CA Council is the group's control tower created in 2024 after criticism that "affiliates were multiplying like octopus legs and couldn't be managed." At launch, Kakao founder Kim Beom-su co-chaired it with CEO Chung Shin-a. Kakao said it would function like Samsung Electronics' Business Support Task Force and the SK Supex Council.
At the center of the CA Council now is chief representative Hwang Tae-seon. Born in 1982, he worked at SK Telecom, SK Planet, and the SK SUPEX Council before joining Kakao in 2018 as head of strategic support. Hwang was tapped as CA Council chief representative the year the founder was jailed. As the founder's legal risk cut off communication with Kakao employees, Hwang emerged as the real power at Kakao.
Although the founder was acquitted at first instance on Oct. 21 last year, he is not actively engaging in management now for health reasons. Hwang moved into that gap. When Hwang rose to chief representative of the CA Council, he reportedly sought to place members of the founder's secretariat into key CA Council posts, a sign of his clout. D, who is well-versed in Kakao's internal affairs, said, "The founder strongly dislikes anyone telling him 'you can't do that' outright, and he abhors responding to company problems with confrontation," adding, "Hwang's speech patterns are 'Yes' and 'That's right.' That's why he (earned the founder's trust and) rose to CA Council chief representative."
A business community source said, "It's ironic that someone without CEO experience took the role of (CA Council) chief representative."
◇ The fallen No. 2: former Kakao investment chief Bae Jae-hyun
Kakao's former No. 2 figures were indicted alongside the founder on suspicion of price rigging in SM Entertainment shares. A prime example is former Kakao investment chief Bae Jae-hyun. A former Director General at CJ Group's Future Strategy Office, he moved to Kakao in 2015. Bae is known to have played a key role in Kakao's 2016 acquisition of Melon, the No. 1 music streaming service in Korea, through an investment of 1.87 trillion won. Kakao then went on to establish Kakao Mobility and acquire Groki.com (now Zigzag), among others.
As Kakao grew, the founder's longtime associates stirred controversy over issues such as alleged stock option cash-outs and swearing during meetings. In this process, Bae served as a check, and as the CA Council's investment chief he centralized group M&A decisions, cementing himself as the No. 2. But criticism over octopus-like expansion coincided with poor performance at Tapas and Radish, which he led the acquisition of, and his standing began to wobble. Decisively, the legal risk stemming from SM Entertainment hounded the former investment chief.
Wi Jung-hyun, a professor in the business administration department at Chung-Ang University, said, "Unlike large corporations, Kakao pursued short-term growth through M&A under autonomous and delegated management, so it's a structure that works only with the founder at the center."
◇ Doubts about the CA Council… Even after the reorg, "like just changing the outer garment"
The CA Council has been criticized for, contrary to its founding purpose, holding excessive authority and amplifying group risk. In response, the CA Council announced an organizational overhaul on the 23rd. The company said, "We are reorganizing to shift from a role of recommending and advising to a body that accelerates execution," adding that as of the 1st of next month it will change the existing structure of "four committees, two chiefs, and one unit" to "three offices and four divisions."
After the reorganization, under chair Chung Shin-a, the CA Council placed the Group Investment Strategy Office, Group Finance Strategy Office, and Group HR Strategy Office. Kim Do-young, CEO of Kakao Investment; Shin Jong-hwan, Kakao CFO; and CA Council chief representative Hwang Tae-seon will lead each office. Existing CA Council Chairpersons Kwon Dae-yeol (Group ESG), Lee Na-ri (Group PR), and Chung Jong-wook (Group compliance management), and Director General Lee Yeon-jae (Group PA) will keep their ranks with only their titles changed. The organizations under the four division heads will be transferred to Kakao. The CA Council organization will shrink from about 150 people to about 50.
D, who is well-versed in Kakao's internal affairs, said, "There is intense, invisible sparring between the faction around the chief representative Hwang and the rest of the organization."
Baek Ki-bok, an emeritus professor at Kookmin University, said, "If (corporations) want to pursue fundamental change, the key is to change people and gain new momentum," adding, "Only changing the CA Council's structure and seats is like (keeping the inside and) just changing the outer garment." Ryu Jong-gi, an adjunct professor at Sogang University's College of Media, Arts and Science, said, "A CA Council-centered decision-making structure with unclear lines of responsibility is a serious 'governance discount' factor," adding, "It is painful that the leadership vacuum and internal conflict are erasing the future blueprint."