Kakao failed to make the cut when five elite teams were selected last Aug. for the government-led "independent artificial intelligence (AI) foundation model" project. Then in Sept., it carried out a sweeping overhaul of "KakaoTalk," only to roll it back after user backlash. The national messenger "KakaoTalk" ceded the No. 1 app spot in Korea to YouTube, and its AI business has yet to find direction. 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 CEO of Kakao, but in reality Team Hwang (Hwang Tae-seon, head representative of the CA Council) is the most powerful figure inside Kakao." (Kakao executive A)
"After seizing power, Team Hwang cut off executives' communication with Brian (Kim Beom-su, founder and head of the Future Initiative Center). If executives get caught trying to meet one-on-one, they fall out of favor with Team Hwang. It feels like the company has become Team Hwang's playground." (Kakao employee B)
On July 23, 2024, Kakao founder Kim Beom-su was arrested on allegations of price rigging involving SM Entertainment. Kakao said that day it was "discussing countermeasures under the leadership of CA Council co-chair Chung Shin-a and will do our best to minimize any management vacuum." But in the absence of the founder Kim, the pinnacle of power at Kakao, ironically, was not CEO Chung but head representative Hwang Tae-seon.
After controversy over being an "overlapping power" with excessive authority, the CA Council announced a reorganization on the 23rd of this month, but inside Kakao critics say it is "a failed reform that kept the people in place and only changed the structure, leaving the shadow forces intact." Kakao employee C said, "In the current structure where Team Hwang holds power, it is unfortunate that Sina cannot exert strength," adding, "Sina has no experience leading an organization of thousands and, coming from outside, is busy just taking care of Kakao and adapting."
◇ A former chief of staff rises as the power broker in the founder's absence
The Kakao CA Council is the Kakao Group's control tower created in 2024 after criticism that "affiliates have sprawled like octopus tentacles and become unmanageable." At launch, founder Kim Beom-su and CEO Chung Shin-a co-chaired it. Kakao has explained it would function like Samsung Electronics' Corporate Strategy Office and SK Supex Council.
At the center of the CA Council now is head 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 strategy support. He was tapped as head representative of the CA Council the year founder Kim was arrested. As the founder Kim's legal risk cut off communication with Kakao employees, Hwang emerged as the real power at Kakao.
Although the founder Kim was acquitted at first instance on Oct. 21 last year, he has not been actively engaging in management for health reasons. Hwang moved into the gap. When Hwang became head representative of the CA Council, he reportedly tried to place members of the founder Kim's secretariat into key posts at the council, underscoring his clout. D, who is well-versed in Kakao's internal affairs, said, "The founder Kim extremely dislikes both someone speaking bluntly to say, 'You can't do that,' and responding in a confrontational mode when issues arise in the company," adding, "Hwang's manner of speaking is 'Yes' and 'That's right.' That's why he (won the founder Kim's trust and) rose to head representative of the CA Council."
An industry figure said, "It is ironic that someone without chief executive officer (CEO) experience is serving as head representative of the (CA Council)."
◇ The fallen No. 2, former Kakao head of investments Bae Jae-hyeon
Kakao's former No. 2 figures were brought to trial with the founder Kim on allegations of price rigging tied to SM Entertainment. A representative example is former Kakao head of investments Bae Jae-hyeon. 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, by investing 187 billion won. Kakao later established Kakao Mobility and acquired Groki.com (now Zigzag), among others.
As Kakao grew, the founder Kim's long-time circle stirred controversy over alleged stock option cash-outs and profanity during meetings. During this period, Bae played a checking role and, as CA Council head of investments, centralized M&A decisions within the group, cementing his status as the No. 2. But criticism of octopus-like expansion coincided with weak results at Tapas and Radish, which he had led the acquisitions of, and his standing in the company began to wobble. Decisively, the legal risk stemming from SM Entertainment hounded the former head of investments Bae.
Wi Jeong-hyeon, a professor in the business administration department at Chung-Ang University, said, "Kakao, unlike large corporations, has pursued short-term growth through M&A under autonomous and delegated management, so it is a structure that works only with the founder Kim at the center."
◇ Skepticism over the CA Council… Even after reorganization, "just a change of outerwear"
Contrary to its founding purpose, the CA Council has been criticized for wielding excessive authority and amplifying group risk. In response, the council announced a reorganization on the 23rd. The company said it was revamping "to shift from a recommending and advising role to an organization that accelerates execution," and that as of the 1st of next month it will change the existing structure of "four committees, two heads, and one unit" to "three offices and four leads."
After the reorganization, under Chair Chung Shin-a, the CA Council placed the Group Investment Strategy Office, Group Financial Strategy Office, and Group HR Strategy Office. Kim Do-young, CEO of Kakao Investment, Shin Jong-hwan, Kakao CFO, and Hwang Tae-seon, head representative of the CA Council, will lead each office. The existing CA Council Chairpersons Kwon Dae-yeol (head of Group ESG), Lee Na-ri (head of Group PR), and Jeong Jong-uk (head of Group compliance management) and Director General Lee Yeon-jae (head of Group PA) will keep their ranks and only change their titles. The organizations under the four leads will be transferred to Kakao. The CA Council's headcount will be reduced from about 150 to about 50.
D, who is well-versed in Kakao's internal affairs, said, "The invisible war of nerves between head representative Hwang's faction and the rest of the organization is intense."
Baek Ki-bok, an emeritus professor at Kookmin University, said, "If (corporations) seek fundamental change, the key is to change people and gain new momentum," adding, "Only changing the CA Council's structure and positions is like (keeping the inside and) just changing the outerwear." Ryu Jong-gi, an adjunct professor at Sogang University's School of Media, 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 future blueprint is disappearing due to a leadership vacuum and internal conflict."