Kakao has reduced its number of subsidiaries by 30% over the past two years, according to data released on August 31, 2025.

The South Korean IT company, known for operating the KakaoTalk messenger, now has 102 subsidiaries, down from 147 in May 2023.

The drop follows Kakao’s efforts to restructure and focus more on AI, with the company streamlining operations outside its core business.

🔗 Source: Yonhap

🧠 Food for thought

1️⃣ Tech giants streamline subsidiaries when pivoting to competitive AI markets

Kakao’s aggressive subsidiary reduction, cutting 30% of its business units from 147 to 102 over just two years, reflects a broader pattern of tech companies shedding complexity to compete in AI 1.

This streamlining coincides with Kakao’s major AI push, including its OpenAI partnership and plans to launch the Kanana AI platform in September 2.

The urgency becomes clearer when considering that Kakao was excluded from South Korea’s $145 million sovereign AI project, with government evaluators citing that Kakao’s AI development lagged behind competitors 3.

The company’s willingness to sell valuable assets like Neptune Co. to Krafton and face ongoing speculation about divesting major units worth billions demonstrates how AI competition is forcing even successful companies to make structural changes 14.

2️⃣ Conglomerate complexity becomes competitive liability in fast-moving markets

Kakao’s subsidiary reduction highlights how sprawling corporate structures that once signaled growth can become strategic burdens during rapid market shifts.

Industry experts have specifically criticized Kakao’s “expansive business model” for creating governance concerns, with the Korea Herald noting that the complex structure hindered the company’s ability to focus on core priorities 4.

The scale of Kakao’s portfolio, managing 147 subsidiaries across gaming, mobility, entertainment, and fintech, required management attention and resources that could have been directed toward AI development where the company now trails competitors.

This pattern mirrors challenges faced by other diversified tech conglomerates when disruptive technologies demand focused investment and rapid decision-making, suggesting that corporate complexity itself has become a competitive disadvantage in today’s tech landscape.

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