Naver and Kakao, South Korea’s top tech firms, are adopting different AI strategies after reporting record Q2 earnings in 2025.

Naver is highlighting global expansion with its sovereign AI technology and is working on projects like digital twin platforms in Saudi Arabia and an AI data center in Morocco.

The company has also integrated AI into its core services, including a search result summarization feature launched in March, which currently covers 8% of queries, and is set to expand to 20% by year-end.

Naver plans to introduce an AI-powered shopping agent this year to provide personalized product recommendations.

Meanwhile, Kakao is focusing on bringing AI features to its domestic users by embedding new services into its KakaoTalk messenger app.

The company will introduce a joint AI service with OpenAI and is developing on-device AI models for KakaoTalk.

Kakao will also update its app with new social and short-form video features later this year.

🔗 Source: The Korea Times

🧠 Food for thought

1️⃣ Government policy is actively reshaping Korea’s AI competitive landscape

The divergent strategies between Naver and Kakao reflect broader government intervention in Korea’s AI market through selective funding and regulatory frameworks.

Korea leads OECD countries with a 28% AI adoption rate, nearly four times the 8% average, demonstrating strong market conditions for both companies’ approaches 1.

However, the Korean government recently excluded KT and Kakao from its 200 billion won (~$145 million) sovereign AI project, which prioritizes domestic innovation over foreign partnerships 2.

This exclusion likely reinforces why Naver emphasizes sovereign AI development while Kakao pivots toward collaboration with OpenAI, as each company adapts to different levels of government support.

Korea became the first Asia-Pacific country to implement comprehensive AI legislation with its AI Framework Act, effective January 2026, creating standardized requirements that both companies must navigate 3.

2️⃣ Korean companies face an implementation gap that both strategies aim to bridge