Kakao's Kim Beom-su Faces Worst Year Yet... Even the Fair Trade Commission's Hammer Strikes

Triple Challenges of Corporate Trust, Leadership Crisis, and Regulatory Issues
Fair Trade Commission's Complaint Against K Cube Holdings, Shaking Even the Governance Structure?

Kim Beom-su, Head of Kakao Future Initiative Center, appeared at the comprehensive audit of the Ministry of Science and ICT and related audit target organizations held at the National Assembly on the 24th, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Yuri Choi] Kim Beom-su, founder of Kakao (Head of Future Initiative Center), is facing his worst year yet. At the beginning of the year, leadership was put on red alert due to a controversy over the abrupt departure of a subsidiary CEO. The Kakao service outage incident shattered corporate trust. Even Kim’s personal company, a key pillar of Kakao’s control, was hit hard by the Fair Trade Commission’s crackdown. Analysts say Kim is confronting his most severe crisis.

Fair Trade Commission Files Charges for Violation of Separation of Banking and Commerce

On the 15th, the Fair Trade Commission issued a corrective order against K Cube Holdings (K Cube) for exercising voting rights over Kakao and Kakao Games from 2020 to 2021, and filed charges against K Cube with the prosecution. The reason was that K Cube, a financial company, violated the separation of banking and commerce by exercising voting rights through shares of its affiliates.

Industry insiders interpret this as a direct targeting of Kim. K Cube is a personal company wholly owned by Kim. It is also one of the pillars of Kim’s control over Kakao. As of the end of September, K Cube held a 10.51% stake in Kakao, making it the second-largest shareholder after Kim himself, who holds 13.27%. If K Cube’s voting rights are restricted due to the Fair Trade Commission’s action, the entire Kakao governance structure centered around Kim could be shaken.

Triple Hardships: Leadership, Trust, and Regulation

Kim’s crisis began in January when Ryu Young-jun, the former CEO of Kakao Pay and the chosen successor to lead Kakao, voluntarily resigned amid a stock sell-off controversy. This exposed the limits of Kim’s independent management approach. While guaranteeing independent management rights and rapidly expanding subsidiaries was the secret to Kakao’s growth, it also led to a survival-of-the-fittest environment that sparked internal conflicts. Previously, Kakao Mobility faced backlash for attempting to raise taxi fares, which was criticized as infringing on local businesses.

The Kakao service outage caused by a data center fire in October escalated into a corporate trust crisis. The company was criticized for focusing on growth while lacking social responsibility and crisis response capabilities. Leadership issues came to the forefront when Namgung Hoon, Kim’s trusted lieutenant and former Kakao CEO, stepped down. Over the past year, Kakao has changed CEOs four times, raising concerns that the "Kim Beom-su faction" has reached its limits. Meanwhile, Kakao’s market capitalization, which once closely chased LG Group and Hyundai Motor Group and exceeded 100 trillion won, has been halved. The current valuation of the Kakao Group stands at around 47 trillion won. Kakao slipped from 4th to 12th place in the KOSPI market capitalization rankings.

Regulatory issues are also targeting Kakao. Various government agencies including the Fair Trade Commission, Ministry of Science and ICT, Personal Information Protection Commission, and Financial Supervisory Service have announced plans to strengthen platform regulations. In particular, the Fair Trade Commission is preparing sanctions against Kakao Mobility for alleged preferential treatment of affiliated taxi calls and is set to announce guidelines on online platform monopolies and antitrust reviews.

Butterfly Effect Impacting Governance: "Kim Beom-su Must Directly Manage the Crisis"

In March, Kim resigned as chairman of the Kakao board, stating he would focus on global business and stepped away from frontline management. However, as the spotlight turned to Kim, it became difficult for him to avoid responsibility. Some argue that Kim’s absence has exacerbated the crisis, and he must directly manage the situation. Since the entire Kakao governance structure could be destabilized, this should be regarded not as a passing growing pain but as a serious crisis.

Professor Wi Jeong-hyun of Chung-Ang University said, "Starting from last year’s local business controversy to the service outage incident, the 'national company' has become a 'national pariah,' leading to this sanction. Although K Cube has announced plans to take legal action, the controversy will continue for some time, and since this issue could affect governance, it is a serious matter."

This content was produced with the assistance of AI translation services.