1st-ever strike looms at Kakao as final mediation talks set for Wed.

Kakao's office in Seongnam, Gyeonggi Province / Yonhap

Kakao’s first-ever strike hangs in the balance as the company’s labor union and management prepare to hold a second — and final — mediation session Wednesday.

Unless the two sides reach a deal in talks overseen by the Gyeonggi Regional Labor Relations Commission, employees at the operator of Korea’s most widely used messaging app, KakaoTalk, and its four affiliates are expected to walk off the job.

The union filed for mediation with the commission after wage negotiations with management broke down on May 18. The mediation period, which may be extended by up to 10 days with mutual consent, was subsequently extended following the first round of talks.

Two days later, the union said workers at Kakao and four affiliates — Kakao Pay, Kakao Enterprise, DK Techin and XL Games — voted in favor of a strike. The union is also said to be considering a range of collective actions, including strikes, work-to-rule campaigns and slowdowns.

The union is reportedly seeking performance-based incentives equivalent to around 13 to 14 percent of the IT giant's operating profit. It has also called for broader reforms, including changes to management practices, stronger job security, fairer profit-sharing and improved working conditions and employee welfare programs.

Kakao and its affiliates' unionized members hold a rally in Seongnam, Gyeonggi Province, Wednesday. Yonhap

“Executives whose terms had expired received hefty compensation or were appointed as advisers without taking on clear responsibilities,” a Kakao union member said during Wednesday's rally in Seongnam, Gyeonggi Province.

“Executives received short-term incentives of up to 150 percent tied to 2024 financial targets and ESG performance metrics, while the bonus pool for employees shrank.”

One Kakao Pay union member said, “Despite delivering record-high earnings, the share of profits allocated to employees remains insufficient. Even that limited portion is being funneled to a small group of executives.”

Even if a first-ever strike takes place, the walkout is unlikely to immediately disrupt the company’s core services, including flagship messaging app KakaoTalk, as tech platforms typically continue operating through automated infrastructure and distributed systems, unlike manufacturing lines that can come to a halt during strikes.

However, if the situation drags on, it may pose a brutal blow to Kakao's key growth strategies, including artificial intelligence (AI) model development, service upgrades and new business initiatives.

Particularly, it has positioned this year as a turning point for its AI business transition, expanding AI features across key services — including messaging, commerce, content and finance — centered on its in-house AI model, Kanana.