Kakao is deploying its artificial intelligence capabilities primarily to monetize advertising and commerce on KakaoTalk. In that respect, its strategy resembles Meta’s use of AI to improve advertising efficiency on Instagram and Facebook. Meta, however, has both a global user base of more than 3.5 billion and a strong open-source AI ecosystem. Kakao, by contrast, is effectively limited to about 50 million users in South Korea. That is why critics say Kakao’s AI push remains more of a monetization tool than a source of innovation.
/ Image generated by Gemini
Since last year, Kakao has been pursuing a plan to increase time spent on KakaoTalk by more than 20 percent through AI. During an earnings conference call in February, Kakao CEO Jeong Shin-a said she believed the company could achieve that target. The effort comes after Kakao introduced AI services such as ChatGPT for Kakao and Kanana in KakaoTalk following updates to KakaoTalk, while also focusing on expanding services through integrations with partner companies.
In that respect, Kakao resembles Meta. Meta also first applied AI to the advertising and recommendation systems on its own platforms. Daily active users across Meta’s family of apps averaged 3.58 billion in December last year. Its advertising revenue for the fourth quarter of last year rose 24 percent from a year earlier to $58.137 billion.
Meta is also regarded as the leader of the open-source AI ecosystem. According to foreign media outlets including Axios, Meta is considering a long-term plan to make some versions of its next-generation large language model available as open source. Axios said Meta has been the most aggressive among U.S. big tech companies in open-sourcing its latest AI models. LLaMA, the LLM Meta released as open source, had already surpassed 1 billion downloads as of March last year, highlighting how widely developers around the world are learning and using Meta’s AI technology.
Kakao, on the other hand, remains centered on KakaoTalk. Its AI services are largely made up of ChatGPT for Kakao and Kanana in KakaoTalk. Kakao Tools, which connects services from Olive Young, Musinsa, The Hyundai and My Real Trip, is based on ChatGPT for Kakao. In the end, all of Kakao’s AI services are built on KakaoTalk, which has 50 million users. That means KakaoTalk is unlikely to expand its user base globally the way Instagram has.
Nor is Kakao leading an open-source AI ecosystem comparable to Meta’s. PlayMCP, which Kakao unveiled in July last year, is about the closest it has come to creating a point of contact with AI developers. PlayMCP is an open platform that supports connections between various AI models and external tools.
This limits the paths through which Kakao can make money from AI. KakaoTalk is already a national messenger app with little room to add more users in South Korea. If Kakao seeks to monetize AI, it is difficult to expect profit growth from user growth. What remains is raising ad prices by selling advertising more precisely within KakaoTalk, increasing purchase conversion rates to take more in fees, and potentially offering users a wider range of paid AI services.
Choi Seung-ho, an analyst at Sangsangin Securities, said KakaoTalk’s relatively weak adoption of Pung had already shown that users see the app more as a communication tool than as a multipurpose social network. “For Kakao to deliver meaningful growth, it needs to offer users advantages that competing platforms do not,” he said.
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