Naver, Kakao chart divergent AI paths for 2nd half

Naver headquarters, top, and Kakao's office in Gyeonggi Province / Korea Times file

Entering the second half of the year with record-breaking second quarter earnings, Korea’s two leading tech giants, Naver and Kakao, are pushing to build on their momentum with sharply contrasting artificial intelligence (AI)-driven business models.

Naver is focusing on global expansion through its sovereign AI strategy while deepening AI integration into its existing services, whereas Kakao is leveraging its vast domestic user base to infuse AI into everyday life, spanning messaging, e-commerce, advertising and more.

Naver has placed its bets on sovereign AI, which refers to locally developed, self-owned AI technology, as the foundation for its global expansion drive.

The company aims to extend its reach beyond Asia and the Middle East into new territories such as Africa, reinforcing its presence with high-profile projects, including building digital twin platforms in Saudi Arabia and an AI data center in Morocco. A digital twin is a technology that creates a dynamic virtual replica of real-world environments, optimized for urban planning.

Alongside international reach, Naver is doubling down on strengthening its core search engine and e-commerce businesses through AI integration.

Demonstration of Naver's AI briefing service / Courtesy of Naver

The company launched an AI briefing service in March, which uses AI to summarize search results for users, displayed within the search result page. It is currently covering only 8 percent of integrated search queries, but the company expects to enlarge it to 20 percent by the end of this year. Next year, the company will also launch a dedicated AI tab for conversational searching.

On the e-commerce side, Naver plans to roll out a personalized shopping AI agent by this year, which will suggest tailored recommendations for products to users and lead to purchases through its platform.

“By leveraging AI, Naver aims to shore up its platform competitiveness and business capabilities across business-to-consumer, business-to-business and business-to-government sectors, all while locking down new business references for sustained global growth,” Naver CEO Choi Soo-yeon said during the second quarter earnings call on Friday.

Kakao, on the other hand, is focusing on embedding AI into the daily lives of its wide local user base, leveraging its KakaoTalk messenger platform. Its AI-for-all strategy aims to establish an AI agent ecosystem that will streamline and amplify user experience with accessibility and familiarity, targeting users with little to no prior AI experience.

Demonstration of Kakao's AI agent service, Kanana / Courtesy of Kakao

Later this year, Kakao will release a jointly developed AI service with OpenAI, along with lightweight on-device AI models for its flagship messenger app KakaoTalk. The app will also undergo major changes in its five main tabs to include a feed-style social hub among friends and a space for short-form video content.

Kakao CEO Chung Shin-a expressed confidence that the collaboration of OpenAI, the most widely used AI service in Korea, and its KakaoTalk platform would secure Kakao’s dominance in the domestic business-to-consumer AI market.

“Starting in the second half of this year, we’ll create opportunities for everyone in Korea to experience AI in their daily lives,” she said during the second quarter earnings call on Aug. 7.