Kakao was eliminated from the government-led selection of five elite teams for the "independent artificial intelligence (AI) foundation model" project in Aug. last year. Then in Sep. last year, it overhauled "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 is losing direction. ChosunBiz diagnoses the structural problems Kakao currently faces. [Editor's note]
In Nov. last year, a person surnamed Jeong, a CA Council manager at Kakao, held a child's wedding at a hotel in Seoul. At the time, employees belonging to the CA Council collected cash gifts at the congratulatory table, sparking controversy. The people involved said they did it voluntarily, but employees said, "If a boss asks, isn't that an order?" and "Can an executive in charge of ethics do this?" In this month's personnel moves, only the title of the person surnamed Jeong changed from Chairperson of the Responsible Management Committee to head of group compliance management. A Kakao official said, "At some point, a practice took hold at Kakao of not holding anyone accountable even when controversy arises," adding, "There's even talk of trying to appoint James (the person surnamed Jeong) as a registered director."
A, a development planning manager who moved from Samsung SDS to Kakao in 2022. Despite roughly 15 years in the industry, A felt frustrated upon joining Kakao. It was not easy to gather people for work meetings or to compile materials. A said, "Kakao calls itself a flat culture, but for an outsider to blend in and show their skills, the wall of alienation is high," adding, "The systems and policies still aren't mature."
"Kamu-won" (a portmanteau of Kakao and public servant).
It is a word that represents Kakao's executives and employees amid the rapidly changing artificial intelligence (AI) ecosystem. It reflects complacency—settling for high salaries and benefits rather than the company's development, and a lack of urgency. This runs counter to what Kakao founder Kim Beom-su cried out in Dec. 2023, when the company fell into a crisis amid allegations of octopus-like expansion and stock price manipulation: he said, "With the mindset of building a new ship, we must abandon the inertia of the past 10 years and redesign from scratch."
Experts say this atmosphere began to take root in Kakao in the absence of the founder. Wi Jeong-hyeon, a professor in the business administration department at Chung-Ang University, said, "Founder Kim has a sense of crisis, but the salaried executive team leading Kakao does not seem to have urgency," adding, "Kakao is continuing a limiting situation of recycling the existing management that failed to navigate the crisis."
◇ Growing distrust and dissatisfaction over executive misconduct… "Hard to find trust and commitment"
Inside and outside Kakao, the keywords representing "Kakao-ness" that drove the company's growth have been cited as a flat organizational culture and self-direction. However, with the founder absent, leadership and strategy have gone missing, leading to repeated misconduct by executives.
A representative case that dampened employee morale is the personnel matter involving Jeong Gyu-don, Kakao's chief technology officer (CTO). He served as CTO of KakaoBank in Aug. 2021, and three days after the company listed, he exercised stock options and made about 6.6 billion won in profit, sparking a "hit-and-run" controversy. He left the company for personal reasons, but in Jan. 2024 Kakao brought him back as its CTO. The civic group Citizens' Coalition for Economic Justice in Consumer Sovereignty and Kakao's external oversight body, the "Committee for Compliance and Trust," raised issues with Jeong, but Kakao pushed ahead with the appointment. Jeong left in Jan. this year when his term expired.
Alongside executives' moral hazard, employees' distrust and dissatisfaction are growing. In fact, "hotline reports," anonymous reports within Kakao on discrimination, harassment, corruption, and bribery, more than doubled from seven in 2020 to 18 in 2024. The tradition of using English names—meant to embody a flat organizational culture among executives and employees—has also faded. According to the Kakao labor union, in an internal survey of members in Aug. last year, 68% responded that they had witnessed verbal abuse and overbearing attitudes toward colleagues.
Hwang Sung-hyun, CEO of Quantum Insight and a former executive vice president overseeing HR at Kakao, said, "Flat communication that many companies starting as startups try is meant to draw out ideas for innovation and fresh thinking, but that doesn't happen just because you change your name into English," adding, "You need to build ways of working that fit a flat organization, but because that's not easy, there are more places where a flat structure hasn't produced results."
A Kakao employee said, "From the management level down, one-shot opportunism is rampant, and right now it's hard to find trust and commitment at Kakao," adding, "A flat culture looks good on the surface, but from a superior's point of view, it can make it harder to direct work and increase the need to read the room."
◇ Talent once seeking vision now joins for high pay and compensation
Preference for joining the company, a yardstick of corporate competitiveness, is also plummeting. In the past, talent who wanted to join Kakao looked to their own growth potential and Kakao's vision; now, they seem attracted by high salaries and benefits.
In the rankings of "companies university students want to work for" released by Incruit, Kakao ranked No. 1 for three straight years from 2020 to 2022, citing reasons such as personal growth and a promising corporate future. But it slipped to No. 3 in 2023 and 2024, and fell to No. 6 last year. Reasons for wanting to join Kakao also shifted to excellent benefits and satisfying pay and compensation systems. A Kakao employee said, "The change in university students' reasons for preferring Kakao applies exactly the same to the current Kakao management," adding, "There is no urgency to bring about (positive) change at the company."
Inside the company, there is also skepticism about HR strategy. That is because Hwang Tae-seon, the CA Council's head of HR strategy, who became controversial as a "hidden power broker" within Kakao, merely had a title change in this month's personnel moves and still wields real power.
Despite governance controversies and executives' moral hazard, Kakao did not pursue a personnel shake-up in recent appointments. An internal Kakao source said, "Without a reshuffle of people, it will be hard to expect any change going forward." Hwang Yong-sik, a professor in the business administration department at Sejong University, said, "The most dangerous thing for corporations is a revolving-door personnel system centered on the inner circle," adding, "The current setup is a bad internal signal."