[2021 National Audit] Naver and Kakao "We Will Focus on Discovering Future Growth Engines Rather Than Local Small Businesses"

[Image source=Yonhap News]

[Asia Economy Reporters Kang Nahum and Boo Aeri] Lee Hae-jin, Naver's Global Investment Officer (GIO), addressed criticisms regarding insufficient efforts in discovering future growth engines such as global expansion, stating, "Naver's social mission is to enter new markets, not existing ones," and expressed his intention to increase investments. Kim Beom-su, Chairman of Kakao's Board, also expressed confidence, saying, "Starting around this time next year, we will hear good news from the global market."

On the 21st, Lee GIO appeared as a witness at the National Assembly's Science, Technology, Information and Broadcasting Communications Committee comprehensive audit and said, "Naver is investing in businesses based on the metaverse and 5G robots. We are the company that invests the most relative to sales."

This was in response to People Power Party lawmaker Park Sung-joong's criticism that platform companies might be focusing more on entering local markets rather than creating future growth engines.

Lee GIO said, "In the U.S., we acquired the number one web novel company, and we also participated in acquiring a European AI research institute and a Spanish e-commerce company," adding, "Our employees are working hard and producing results, and we will do our best to meet expectations by working even harder in the future."

[Image source=Yonhap News]

Chairman Kim, who appeared together that day, responded to similar criticisms by saying, "Kakao has only been profitable for 2 to 3 years, so there was a lack of active investment," and added, "For the past 2 to 3 years, we have been investing more aggressively than any other company in new growth engines such as artificial intelligence (AI) and blockchain, and now we are expanding the scope of our investments."

He said, "We have reached the stage of securing bases that can be further expanded while achieving results in Japan, the U.S., and Southeast Asia," and added, "Probably starting around this time next year, we will hear good news from the global market."

Both leaders also expressed their commitment to coexistence with small business owners. Lee GIO said, "We have cooperated with small business owners in various forms for a long time, but there are still many areas that need improvement," and added, "We will deeply consider whether there are ways to cooperate more actively."

Chairman Kim also said, "We have had in-depth discussions several times with the heads of affiliated companies within Kakao about coexistence with small business owners," and added, "We are focusing on preparing concrete measures and encouraging each affiliate to announce coexistence plans."

Regarding controversies over commission fee increases on each platform, both leaders acknowledged the issue and promised fair profit distribution. Lee GIO said, "The commission Naver receives is e-commerce commission, and as far as I know, we have not increased commissions just because sales have grown," adding, "We will thoroughly examine whether there are issues with commissions for small businesses newly entering the market and whether there is a way to lower them."

Chairman Kim also said, "Personally, I believe that platform profits should not be monopolized by the platform," and added, "We will work to adjust and improve any shortcomings."