Preparing for AI War
Naver Corp. and Kakao Corp. are seeking to push into the global market again. In particular, the two companies will jump into the competition with global information and communications technology (ICT) companies through the investment in artificial intelligence (AI) technology-based start-ups or the mergers and acquisitions (M&As).
To this end, the two are trying to invest in promising local funds and list their stocks on foreign exchanges, focusing on securing funds and running business. This is in stark contrast to the past when they targeted the global market with their simple mobile messenger services. All eyes are on how the second round of Naver and Kakao going global turns out.
According to industry sources on December 17, Kakao decided to list its stocks on the Singapore Exchange by issuing global depositary receipts (GDRs) of up to US$1 billion (1.09 trillion won) at the board meeting on December 15. A GDR is a bank certificate issued in multiple countries for shares in a foreign company. While traded like domestic shares, GDRs are offered for sale globally through various bank branches. Kakao plans to raise capital to make an investment in companies and technologies related to the fourth industrial revolution, including AI, at home and abroad. The company will also push ahead with M&As with global mobile content and platform companies. Kakao established a foothold to tap into the global market once again.
Kakao turned to the global market after dominating the domestic mobile messenger market with Kakao Talk but failed in global business. Kakao Talk had to hand over the mobile messenger market in Japan and Indonesia to Naver’s Line.
Accordingly, Kakao changed its strategy to target the global market with AI-based services. The company already entered into an AI technical partnership with Samsung Electronics, Hyundai Motor and GS Engineering & Construction in South Korea and is conducting its own research on AI through Kakao Brain.
With the partnership with promising AI start-ups, Kakao is highly likely to succeed in the global market. An official from Kakao said, “We decided to list the company on the Singapore bourse in order to brace for the competition with global ICT companies and to secure a future growth engine. We will push forward with M&As with firms that can create synergy with Kakao and has a great potential in growth and profitability.”
Naver chose Europe as its outpost to break into the global market. Naver founder Lee Hae-jin directly oversees business in Europe. Naver also keeps an eye on AI-based start-ups. The company acquired the Xerox Research Centre Europe (XRCE) in Grenoble, France, from U.S.-based Xerox Corp. in June, accelerating the expansion of research and development on future technologies like AI.
Naver injected 100 million euros (US$118 million or 128.7 billion won) into “K-Fund 1,” which is managed by Korelya Capital, an investment firm co-established by Fleur Pellerin, France’s first Korean-born digital economy minister, and Antoine Dresch, European financial expert, in October. It was an additional 100 million euros (US$118 million or 128.7 billion won) investment after Naver and Line made a 50 million euros (US$59.02 million or 64.33 billion won) investment each in September last year. Based on this, the company plans to seek out promising AI start-ups in various countries, such as the United Kingdom, Germany, the Netherlands and Northern Europe as well as France.
An official from Naver said, “In addition to simple financial investment, Naver and Line are actively sharing their know-how of service development and experience of success in the Asian market. Supporting technical exchanges between South Korean and European start-ups, the two companies will act as a mediator between South Korea and Europe.”