Naver Knocks on the 'Dream Market', Facing Off Against Big Tech

[NECAO, Becoming a Global Tech Company ④]
Opening 'Global 3.0' with Technology Investment
Building an AI Industry Ecosystem Beyond Individual Services
Expanding Markets to the Middle East, Europe, and North America

"North America and Europe are dream markets and arenas of challenge. It is difficult with just messenger services, so we will invest in new technologies to find opportunities." On July 15, 2016, this was the ambition expressed by Lee Hae-jin, Naver's Global Investment Officer (GIO), on the day Line, Naver's first global venture, was listed in the US and Japan. True to the GIO's words, Naver has invested about 25% of its annual revenue in research and development every year and expanded its business portfolio. Now, seven years later, it stands at the threshold of entering the 'Global 3.0' phase. After creating success stories with individual services in 1.0 and diversifying them in 2.0, the goal is to build a new industrial ecosystem through technology.

From Infrastructure to Services... Building an AI Ecosystem

The core of technological leadership is artificial intelligence (AI). Naver will launch the next-generation ultra-large AI 'HyperCLOVA X' on the 24th of next month. Compared to 'HyperCLOVA,' unveiled in 2021, the amount of Korean and English training data has been significantly increased. It is expected to become the world's best AI model in Korean while also fluent in English. An ultra-large AI proficient in Japanese is also being advanced. Naver and Line have operated the joint AI brand 'CLOVA' and collaborated on technology. They have trained it with the equivalent of 2,700 years' worth of Japanese language data in newspaper terms.

AI technology extends not only to applied services but also to infrastructure such as cloud and semiconductors. Messenger Line and the enterprise collaboration tool Naver Works (called Line Works in Japan) plan to apply HyperCLOVA X. B2B services targeting overseas markets, such as Whale (browser) and Papago (translation), will also incorporate HyperCLOVA X to enhance competitiveness.

'NeuroCloud' for HyperCLOVA X will also be launched in October. It is a customized cloud where the server infrastructure running HyperCLOVA X is installed inside the customer's data center. This is to prevent data leakage concerns from governments and enterprises. Sovereign technology that does not succumb to big tech companies by handing over data is a key part of Naver's global strategy. It designs customized clouds while respecting each country's data sovereignty and regulations. Depending on user needs, it is possible to package Naver services or collaborate with local companies. This differs from big tech companies that require users to conform to their own standard policies to use AI and cloud services. Additionally, Naver plans to enhance service quality and price competitiveness with AI semiconductor solutions developed jointly with Samsung Electronics.

A Big Tech Challenger in the Middle East and Europe... Knocking on North America

Naver is expanding its global activities. Beyond Japan and Southeast Asia, it is eyeing the Middle East and Europe. It targets regions with increased interest in data sovereignty, including Europe, where antitrust issues and big tech crackdowns are in full swing. The aim is to turn the crisis of growing big tech dominance into an opportunity.

Visible results are emerging one by one in the Asia-Pacific region. By collaborating with local telecom companies, Naver is building references necessary to attract government and corporate clients. Earlier this year, it formed a partnership with Indonesia's state-owned telecom company Telkom, following Singapore's largest telecom company StarHub. Naver plans to apply its experience of building private 5G at its new headquarters 1784 to local public sectors. It has also expanded into the Middle East, a region interested in digital transformation as a future growth engine but unwilling to be dependent on American technology. First, it will apply digital twin, ultra-large AI, and cloud technologies to 'NEOM City,' a mega advanced city promoted by Saudi Arabia. A digital twin is a virtual world that scans real spaces or objects entirely. It is infrastructure technology necessary for creating high-precision maps for robots or autonomous vehicles, city monitoring, and simulations of environmental changes. Cooperation is also being sought with the United Arab Emirates (UAE) on national-level digital transformation projects.

Naver is also knocking on Europe and North America. It is pursuing membership in the European Union (EU) Cloud Alliance, which the EU has invited it to join. The EU wants to entrust the cloud market to domestic companies but lacks technological capabilities. Therefore, it is seeking a third option other than the US and China. If Naver joins, it will be the only member from a non-European country. In North America, Naver's acquired fashion C2C platform 'Poshmark' and web novel platform 'Wattpad' serve as forward bases. Recently, Poshmark introduced Naver's AI technology to enable product searches with a single photo. Wattpad plans to apply AI technology jointly researched by Naver and the University of Toronto in Canada.