Kakao cuts 30% of affiliates in reform push

Kakao has reduced its number of affiliates by nearly 30% over the past 18 months, dropping from 132 to 99, as it focuses on AI and seeks to address reputational issues.

The South Korean tech company has faced criticism over unfair business practices and executive misconduct, including a fine against its taxi-hailing unit Kakao Mobility for allegedly inflating sales and an indictment of founder Kim Beom-su for stock manipulation.

CEO Chung Shin-a, who took office in March 2024, said the number of affiliates may fall further to around 80 by the end of 2025.

Chung has led reform efforts since 2023, aiming to strengthen governance and operations.

She said these changes have improved the company’s financial position, pointing to a 39% year-on-year rise in Q2 operating profit to 185.9 billion won (US$130.3 million).

🔗 Source: Yonhap

🧠 Food for thought

Implications, context, and why it matters.

Kakao’s affiliate cut is too blunt to be strategic

Kakao cut affiliates from 132 to 99 over 18 months and targets 80 by year-end, which CEO Chung Shin-a called “strategic moves to focus on key business in the AI era.” Her letter named no units to sell, merge, or close. Kakao Entertainment, valued near ₩10 trillion and loss-making, lacks a plan 1. KakaoTalk engagement fell 16% since mid-2021 as YouTube passed it in monthly active users (MAUs) and Instagram in time spent 2. The overhaul follows an indictment of founder Kim Beom-su over the 2023 SM Entertainment deal and fines tied to Kakao Mobility’s Kakao T practices 2.
From October 2025, ChatGPT using GPT-5 lands in KakaoTalk with links to Kakao Map (Kakao’s mapping app) and Melon (its music streaming service) 3. Kanana, an on-device Korean assistant that runs on phones rather than the cloud, will follow a closed beta (a limited test with invited users) next month 3. Spend, infrastructure, and monetization targets remain undisclosed 3.

Non-core Kakao units are ripe for external buyers

With affiliates heading to 80, Kakao is offloading or combining units. Kakao Games will sell its stake in golf unit Kakao VX to IVG (an investment group) for ₩259.5 billion on Oct. 15, 2025, and it sold stakes in Sena Technology and Neptune 4.
Kakao Entertainment, at ₩10 trillion, failed multiple IPO (initial public offering) attempts and posted net losses 1. Kakao Games will raise ₩108.5 billion through a third-party paid-in capital increase (issuing new shares to external investors) for AAA development 5.