Kakao (035720) has officially ruled out entering large-scale AI infrastructure businesses such as AI data centers and GPU cloud services, declaring its focus on business-to-consumer (B2C) AI services. Meanwhile, subsidiary Kakao Enterprise has appointed Lee Jae-han as its new CEO to strengthen competitiveness in AI infrastructure operations targeting corporate and public sector clients. As the parent company and its subsidiary clearly diverge in their AI business strategies, attention is turning to the reorganization of the Kakao group’s overall AI value chain.
Kakao Enterprise announced on the 6th that it held an extraordinary shareholders’ meeting and board meeting to appoint Lee Jae-han as its new CEO. Lee previously served at Kakao Enterprise as head of the Cloud Infrastructure and Digital Transformation (DX) division and as business division head, leading the entire process from technology strategy formulation to commercialization. Prior to joining Kakao, he was responsible for designing and operating KakaoTalk’s infrastructure architecture as Kakao’s system engineering leader.
Upon taking office, Lee plans to stably maintain the continuity of Kakao Enterprise’s core businesses, including AI infrastructure and hybrid GPU-as-a-Service (GPUaaS), while further strengthening AI transformation (AX) capabilities to expand the customer base among corporate and public sector clients. “We are at a major inflection point where AI data centers, cloud infrastructure, and AI platforms are becoming increasingly important in the new paradigm shaped by AI,” Lee said. “At this critical moment of change, I will do my utmost to lead AI transformation and drive industry-wide change based on Kakao Enterprise’s cloud expertise and technological capabilities.”
Earlier the same morning, Kakao CEO Chung Shin-a made clear during the company’s second-quarter earnings conference call that there are no plans to enter AI factory or infrastructure businesses, including AI data centers and GPU cloud services. “We thoroughly reviewed the business viability across the entire AI value chain, including AI data centers, GPUs, and the cloud market, but concluded that the infrastructure layer is not where Kakao can exert its highest competitiveness in the AI era,” Chung explained.
Kakao’s decision is based on two main rationales. The first is alignment with core competencies. “Kakao has built its success formula based on B2C capabilities, creating services that deeply permeate users’ daily lives,” Chung emphasized. “These core competitive strengths will remain unchanged in the AI era.” With KakaoTalk-based AI services already showing tangible results, the company believes concentrating capabilities on AI agents will be more effective.
The second is financial risk. “AI infrastructure businesses require large-scale upfront investment and continuous capital expenditure,” Chung noted. “Given the recent pace of AI technology advancement, hardware equipment such as GPUs and AI servers is undergoing generational replacement very rapidly.” She added, “Considering the ongoing competitive supply expansion, it is difficult to guarantee that the high profitability arising from the current supply-demand imbalance will persist over the long term. We judged that the expected future return on investment is not sufficiently high relative to the short-term financial burden we would need to bear.”
As a result, the Kakao group’s AI business will adopt a clear dual-track strategy. The parent company Kakao will concentrate capital and capabilities on developing B2C AI services for the entire South Korean population, while subsidiary Kakao Enterprise will target the B2B market serving corporate and public sector clients based on infrastructure such as AI data centers and GPUaaS. “In conclusion, comprehensively considering Kakao’s core competitiveness and financial aspects, we will enhance corporate value by focusing on creating AI services that the entire population habitually uses in their daily lives, rather than allocating large-scale capital to enter the infrastructure business,” Chung reiterated.
Under Lee Jae-han’s leadership, Kakao Enterprise aims to lead AI transformation by leveraging its cloud expertise and technological capabilities. Lee’s experience in designing KakaoTalk’s infrastructure and his track record of overseeing business divisions are expected to enhance trust among corporate and public sector clients and help establish a foundation for sustainable growth. Attention is now focused on whether the Kakao group can secure competitiveness in each market through its bifurcated B2C and B2B AI strategy.