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Kakao reduces its affiliates by 30% as part of reform efforts

Published: 13 Oct. 2025, 11:39 Updated: 13 Oct. 2025, 15:10

The photo shows a Kakao taxi waiting at the taxi stand at Seoul Station in central Seoul on May 28. [NEWS1]

Kakao said Monday the number of affiliates has decreased nearly 30 percent over the past one and a half years as part of broader efforts to focus on AI and restore public confidence.

"Since my inauguration, the number of Kakao's affiliates has dropped to 99 from 132 for the recent one and a half years," CEO Chung Shin-a said in a letter to shareholders. She took office in March 2024.

"This is part of our strategic moves to focus on our key business in the AI era and our determination to restore social trust."

The number is expected to fall further to around 80 by the end of this year, she added.

Kakao has been working to revamp its governance and operations as the company has been under fire for unfair business practices and the moral hazard of its executives.

Kakao Mobility, Kakao's taxi-hailing service operator, has been fined by the financial authorities for allegedly inflating sales and faced public criticism for abusing its market dominance through its ride-hailing platform, Kakao T.

Its founder Kim Beom-su was indicted for allegations of stock price manipulation related to Kakao Entertainment's acquisition of SM Entertainment in 2023.

Chung has been spearheading company-wide reform efforts since 2023, when she was appointed to lead a reform council several months before becoming CEO.

She said the ongoing overhaul has strengthened Kakao's financial health, citing a 39 percent on-year jump in operating profit to 185.9 billion won ($130.3 million) in the second quarter despite an economic slowdown.

Regarding growing complaints over a recent update to its popular messenger KakaoTalk, Chung reiterated plans for a rollback.

"I take shareholders' concerns deeply to heart," she said. "We will listen closely to feedback, communicate transparently and respond swiftly to requests."

Last month, Kakao introduced major user interface (UI) changes for KakaoTalk, its biggest overhaul in 15 years, as it seeks to evolve from a simple messaging app into a more comprehensive social media platform.

However, the comprehensive update sparked a strong backlash, with users criticizing its Instagram-like feed and increased advertisements.

Amid mounting complaints, Kakao said it will remove the Instagram-like feed and restore the original version of the app.

Yonhap