Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Will AI save Naver, Kakao?
Kim Yoo-won, co-CEO of Naver Cloud, introduces the company's hyper-scale AI model HyperCLOVA X during the Naver DEVIEW developers' conference at the COEX convention center in Seoul, Feb. 27. Kim said recently that the company will unveil the AI model on Aug. 24. Courtesy of Naver.
By Baek Byung-yeul
By Baek Byung-yeul
Naver and Kakao are betting big on artificial intelligence (AI) services they are scheduled to release in the second half of this year to buoy falling company value amid intensifying competition with global rivals, high-interest rates and other unfavorable conditions, according to industry analysts and officials, Thursday.
Naver and Kakao's stock prices rose from 2020 onward on expectations that online communication would be more vitalized during the COVID-19 pandemic and a favorable investment environment for tech companies with high future growth potential, but they had to give back their gains when interest rates began to rise last year.
As of Thursday, Naver's stock price was closed at 183,400 won while Kakao's was closed at 49,000 won. These are about 25 percent and 30 percent decreases compared to their prices on the same day last year.
For Naver, the industry's view is that its waning search market share gap against Google is the main reason for the company's struggles in the stock market. According to data from NHN Data, Naver had an 80 percent share of the domestic search market in 2017, but the figure fell to 63 percent at the end of 2022 while Google expanded its share from 9 percent to 31 percent over the same period.
Kakao's stock price drop is attributed to a decrease in the parent company's valuation due to the redundant listing of its subsidiaries.
Naver and Kakao think they can raise their value, as they are slated to unveil their AI services in a move to catch up with the emerging generative operations of OpenAI's ChatGPT and Google's Bard.
Kim Yoo-won, co-CEO of Naver Cloud, told reporters on June 26 that the company will introduce its hyperscale AI language model HyperCLOVA X on Aug. 24, saying “the company is currently conducting in-house testing of HyperCLOVA X.”
Based on the AI language model, Naver plans to release its generation search AI chatbot service Cue: in the second half of this year.
Kim Hyun-yong, an analyst at Hyundai Motor Securities, said, "Naver is expected to see strong momentum in its AI and content businesses in the second half of the year, with the unveiling of HyperCLOVA X and the commercialization of services using it."
Karlo, an AI-based image generator developed by Kakao's AI affiliate Kakao Brain, which is expected to be launched later this year. Courtesy of Kakao
Kakao also plans to introduce its own generative AI service and various types of AI services this year, such as Karlo, an AI-based image generator.
"Combining the advantages of AI chatbots with Kakao's assets will serve as a medium- to long-term growth engine,” Kim Dong-woo, an analyst at Kyobo Securities, said.