[Interview] "Breaking Amazon and MS Monopoly"... Naver Cloud Targets Global Pinpoint Market

Park Jong-yeol, Naver Cloud Business Strategy Leader
"Sovereign Cloud Will Become a Big Tech Challenger"

Jong-Yeol Park, Business Strategy Leader at Naver Cloud (Photo by Naver Cloud)

[Asia Economy Reporter Yuri Choi] "Naver Cloud's recognition in the global market is almost zero." This is the current status of the company as stated by Jong-Yeol Park, the Business Strategy Leader of Naver Cloud. Although it ranks third in market share in South Korea after Amazon and Microsoft (MS), and fifth in the Asia-Pacific region, the reality is viewed with cold realism. The desperate situation led to seeking practical alternatives. The idea was to create even a small pinpoint to break through the global market dominated by a few big tech companies. Naver Cloud found that pinpoint in the 'sovereign cloud.'

The sovereign cloud is a concept of an autonomous cloud that does not yield to American companies or governments. It establishes data centers locally and offers cloud services compliant with government regulations. This differs from big tech companies that require users to conform to their own standard policies to use their clouds. We asked Leader Park whether Naver Cloud could become a 'catfish' shaking up the market with its customized cloud.

Potential in Sovereign Cloud...First Proposed in Europe

The sovereign cloud began to attract attention in Europe. Amid ongoing big tech crackdowns over network usage fees and antitrust issues, Europe has a high interest in data sovereignty. Especially after passing a law in 2018 allowing the U.S. to access data from domestic IT companies, concerns grew. This is because the U.S. government can inspect the European servers of Google and Amazon at any time. Europe hastily tried to entrust cloud services to domestic companies but faced difficulties due to lack of competitive technology against big tech. This is why EU member countries formed the Cloud Alliance in 2021 to foster private clouds.

The movement to open the cloud market only to domestic companies became an unexpected opportunity. The EU Cloud Alliance invited Naver Cloud to join, viewing Naver as a counterbalance to American and Chinese big tech companies. If Naver Cloud joins the alliance, it will be the only member from a non-European country. The membership process is currently underway.

Leader Park explained, "Domestic operators are a very unique case that grew thanks to the government blocking foreign operators from entering the public market," adding, "Europe, seeking to learn from Korea's experience, has shown interest in Naver Cloud."

The sovereign cloud is spreading beyond Europe. As sensitive data such as financial and medical information moves to the cloud, countries have started to raise concerns. Japan, Indonesia, Vietnam, and others require personal information and public data to be stored on domestic servers.

The strategy to penetrate the sovereign cloud market is to become a 'junior partner.' Naver Cloud designs customized clouds thoroughly from the user's perspective. Currently, it is collaborating with Singapore's largest telecom company, StarHub, in this manner. The approach involves consulting on cloud services feasible under local regulatory environments and creating prototypes for validation.

Leader Park said, "To use a joint venture analogy, the Singaporean company holds the initiative while Naver Cloud manages cloud services in certain areas," adding, "Although this may reduce business efficiency, sowing these seeds in some countries can yield significant harvests."

Leader Park sees the experience accumulated in the public market as a stepping stone to the private market. Plans include expanding the market by partnering with Software as a Service (SaaS) companies aiming to participate in public projects and supporting their entry into Korea.

Global Market is a Survival Challenge... "Creating Cloud Diversity"

For Naver Cloud, the global market is an essential challenge for survival. The domestic cloud market is worth 3 trillion won, which is only 1% of the global market. Of this, Amazon, MS, and Google occupy nearly 70%. Without growing in the global market, survival is impossible. Issues of cloud monopolies are also increasing. The situation where app market operators like Google and Apple forced in-app payments, raising content prices by 30%, could happen in the cloud sector as well.

Leader Park said, "Big tech offers the sweet temptation of 'providing tools to innovate without hiring many developers,'" but added, "It's a beautiful ecosystem, but once you enter, you become dependent and lose bargaining power on prices." This is why Naver Cloud believes that merely surviving in the global market has value.

Preparations are complete. Leadership changes and organizational restructuring have been made. From this year, Won-Ki Park, who was co-CEO, moved to lead Asia-Pacific business development to focus on global business. Kim Yoo-Won leads Naver Cloud solely. The B2B organizations scattered across Naver, such as Clova CIC (AI), Papago (translation), Naver Works (collaboration tools), and Whale (browser), have been consolidated under Naver Cloud. This is to integrate various solutions on the cloud and operate as one entity.

The goal is cloud diversity. It is not about changing Amazon's yellow to Naver's green. It is about providing cloud services tailored to each country while preventing monopoly damage. Leader Park emphasized, "If we cannot become Amazon immediately, we aim to be a business that makes them uncomfortable," adding, "If we can become an 'alternative' overseas with a customer-friendly cloud, that alone will be meaningful."