Domestic 'Struggling' Kakao... Aiming for a 'Turnaround' in the Japanese Market with AI

Global Talent Recruitment for Business Expansion... Exploring Entry into Japan
Two-Track Strategy: Domestic Vertical Services and Securing Overseas Partners

Kakao is knocking on the door of the Japanese market with artificial intelligence (AI) technology. Although it is struggling domestically due to internal and external adversities, it is exploring entry into Japan, believing that the development of large language models (LLM) is possible based on linguistic similarities. It is expected to pursue a method of integrating its own AI models by finding local partner companies.

According to the IT industry on the 4th, Kakao Brain, Kakao's AI subsidiary, recently began recruiting global development personnel for its multimodal (MM) business division. The global development role involves planning new AI businesses in the Japanese market. Responsibilities include local market research, discovering business pipelines, and service planning. A Kakao official said, "This is to review business feasibility in the global market," adding, "It is not yet the stage to discuss specific business models or services."

Kakao's approach to the Japanese market is seen as a forward base to accelerate global AI commercialization. Although AI has been adopted as a new growth engine with investments in research and development (R&D), progress has been slow domestically. Last year, Kakao Brain planned to unveil its self-developed AI model ‘KO GPT 2.0’ but postponed it repeatedly. Internal and external adversities, including judicial risks spreading throughout the Kakao group, affected this delay. Meanwhile, competitors have accelerated their efforts. Naver unveiled the massive AI ‘HyperCLOVA X’ in early August last year and applied it to search services, while major information and communication technology (ICT) companies such as SK Telecom, KT, and NCSoft have successively introduced their own LLMs.

Being somewhat late, Kakao appears to be focusing on building business models in Japan. It is expected to provide AI models in partnership with local companies. For example, AI content bots that curate personalized content or AI marketing services for small business owners and sellers may emerge. Currently, Kakao Piccoma, which operates the digital comic platform ‘Piccoma,’ is the only Kakao affiliate active in Japan. This is why Kakao is recruiting personnel with not only AI expertise but also a deep understanding of the Japanese market.

Japan is a market where AI demand is rapidly increasing. Centered on manufacturing, the country is promoting digital transformation to overcome challenges such as labor shortages and aging production facilities. Especially since COVID-19, digitalization has accelerated rapidly, increasing the number of places adopting AI services. Since the emergence of ChatGPT, in April last year, related government ministries formed an ‘AI Strategy Team,’ showing that the government itself is utilizing AI. According to Japanese market research firm Fuji Chimera Research Institute, the local AI market is expected to grow from 1.3 trillion yen (about 12 trillion KRW) last year to nearly 2 trillion yen (about 18 trillion KRW) by 2025.

Domestic IT companies view Japan as a ‘land of opportunity’ and are actively targeting it. Naver is applying AI-based shopping recommendation and location recommendation technologies to Yahoo Japan and is discussing cooperation on search technologies. AI startups are also actively entering Japan. Allganize, headquartered in Tokyo, provides enterprise AI solutions ‘Ali’ to Sumitomo Mitsui Banking Corporation and Nomura Securities. Superb AI, which offers a platform to facilitate AI adoption, and AI portal service company Lutton Technologies also established corporations in Japan last year.

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