Kakao Splits into Two: Kakao AI for Chat and AI, Kakao X for Future Investments

South Korean tech giant Kakao is set to divide its operations into two distinct companies: Kakao AI and Kakao X. Kakao AI will spearhead the company's artificial intelligence initiatives, particularly those integrated with its dominant messaging platform, KakaoTalk, and will also encompass advertising and commerce. Kakao X will be responsible for managing the company's future investments and strategic ventures. This strategic move, decided upon in a board meeting on August 21st, aims to streamline decision-making processes and enhance the overall corporate value by allowing each business unit to operate with greater autonomy and focus. The split is structured as an "involuntary division," where existing shareholders will receive shares in both new entities proportionally to the net asset book value, with Kakao AI representing 0.36 and Kakao X 0.64. Kakao cited the increasing complexity of its business and subsidiaries as a reason for the division, stating that a single decision-making framework was hindering rapid execution of growth strategies for individual sectors. The company believes this separation will enable each business to be independently valued in the market according to its specific characteristics and performance. Jeong Shin-ah, the current CEO of Kakao, will lead Kakao AI, which will also integrate subsidiaries like DK Techin and K&Works, positioning itself as an 'AI Core Company'.