South Korea-based AI startup Upstage announced on May 7 that it completed its acquisition of AXZ, the operator of internet portal Daum, as part of its strategy to expand AI-powered search and content services.
The deal follows a memorandum signed in January under which Kakao exchanged its entire stake in AXZ for equity in Upstage after approximately four months of due diligence. Financial details of the acquisition were not disclosed.
Upstage said it plans to integrate its Solar large language model into Daum’s search engine and content database to move beyond traditional keyword-based search and provide direct AI-generated answers.
The acquisition comes amid intensifying competition among South Korean technology firms to embed generative AI into search, media, and consumer platforms.
Key Highlights
Upstage acquired Daum operator AXZ to expand AI-powered search and content services The company will integrate its Solar large language model into Daum’s platform for AI-generated answers The acquisition strengthens Upstage’s AI training data and supports its IPO and unicorn ambitions
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Kakao, the parent company behind KakaoTalk, has been restructuring its business by divesting non-core operations and focusing more heavily on its messaging ecosystem. Daum currently holds around 3% of South Korea’s search market, trailing behind Naver, Google, and Microsoft Bing.
Reports suggest the transaction values Daum at roughly 200 billion won (US$140 million). Through the stock swap, Kakao exits the portal business while retaining a minority stake in Upstage. The move is also part of Kakao’s broader restructuring effort, which reduced its affiliate count from 147 to 94.
For Upstage, the acquisition provides access to nearly 30 years of Korean-language data collected from news articles, blogs, and online communities. This extensive archive is expected to strengthen training for the company’s Solar AI model and support its participation in South Korea’s government-backed national AI foundation model initiative alongside LG AI Research and SK Telecom.
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The deal highlights how legacy internet platforms are gaining renewed value as data sources for generative AI systems. Upstage aims to leverage the acquisition to pursue unicorn status and potentially launch an IPO later this year.