Seoul: Kakao Corp. announced a significant reduction in its number of affiliates, achieving a nearly 30 percent decrease over the past 1 1/2 years. This move is part of the company's broader strategy to focus on artificial intelligence (AI) and rebuild public trust.
According to Yonhap News Agency, Chief Executive Officer Chung Shin-a, who assumed her role in March 2024, communicated to shareholders that the number of Kakao's affiliates has decreased to 99 from 132. She emphasized that this reduction aligns with the company's strategic focus on key businesses in the AI era and its commitment to restoring societal trust.
Chung projected that the number of affiliates could decrease further to approximately 80 by the end of the year. This development is part of Kakao's ongoing efforts to revamp its governance and operations amid criticism for unfair business practices and executive misconduct.
Kakao Mobility Corp., the company's taxi-hailing service, faced fines from financial authorities over alleged sales inflation and public criticism over its market dominance through the Kakao T platform. Furthermore, the company's founder, Kim Beom-su, was indicted on charges related to stock price manipulation during Kakao Entertainment's acquisition of SM Entertainment in 2023.
Since 2023, Chung has led extensive reform efforts, initially as head of a reform council and later as CEO. She reported an impressive 39 percent year-on-year increase in operating profit to 185.9 billion won (US$130.3 million) in the second quarter, despite economic challenges.
Addressing concerns over recent changes to its popular messaging service KakaoTalk, Chung assured shareholders of plans to revert the updates. Last month, Kakao introduced significant user interface changes, marking the largest overhaul in 15 years. However, the updates, featuring an Instagram-like feed and increased advertisements, faced backlash from users. In response, Kakao committed to removing the new feed and reinstating the original app version.