Kim Beom-su, former chairman of Kakao, is appearing at the Financial Supervisory Service on the 23rd to be investigated regarding allegations of stock price manipulation in the acquisition of SM Entertainment. Photo by Kang Jin-hyung aymsdream@
Kakao is facing the biggest crisis since its founding. Founder Kim Beom-su, head of the Future Initiative Center, is on the verge of arrest, while controversies continue within its affiliates. A Kakao Games employee leaked internal information, sparking controversy. This goes beyond an individual employee's misconduct and highlights Kakao's crisis situation without a central leadership.
Kakao Games Employee Leaked Internal Information
Kakao Games fired an employee who leaked update plans for its flagship title, "Odin: Valhalla Rising," to other users.
On the 26th, Kakao Games announced through its official cafe, "The disciplinary action against the employee involved in this leak has been decided as dismissal according to personnel policies," adding, "We are also considering civil and criminal actions based on the investigation results."
Earlier, among "Odin" users, suspicions arose that a person presumed to be a Kakao Games employee frequently shared undisclosed update information with guild members and acquaintances within the game. Reports from users continued, and after controversy, the employee's misconduct was confirmed.
Although the problematic employee was dismissed, the controversy persists. Users have demanded refunds, expressing distrust in the game's management. Some have announced they will stop playing the game. Users felt disappointed that the system to monitor, verify, and sanction employee misconduct did not function properly.
Kakao Games has a Code of Ethical Conduct prohibiting the leakage of internal information, but it remains largely declarative. The fact that the employee's misconduct was discovered and verified solely through user reports in this incident proves this point.
Namgoong Hoon (left) and Hong Eun-taek, co-CEOs of Kakao, are offering a public apology on the 19th at Kakao Pangyo Agit in Seongnam-si, Gyeonggi Province, regarding the large-scale service outage caused by a data center fire.
No Dedication or Affection for the Company
The ongoing controversies surrounding Kakao are analyzed as signs that the control tower is not functioning properly and that festering issues are erupting everywhere.
Last month, Kim Ki-hong, former CFO of Kakao, was suspended for three months after it was revealed he used the corporate card to purchase game items worth about 100 million KRW for personal use. Employees were outraged that the company's financial officer misused company funds at a time when affiliates were conducting voluntary retirements. Eventually, the labor union filed a police complaint against former CFO Kim on charges of breach of trust and embezzlement.
Namgung Hoon, former CEO of Kakao, resigned after earning over 9.4 billion KRW in gains from exercising stock options in the first half of this year. These stock options were granted during his tenure at Kakao Games. As a former CEO of both Kakao Games and Kakao, Namgung is well aware of how severe the company's current crisis is, which has led to strong criticism. Kakao Games' stock price has fallen about 80% from its peak.
On the 20th, employees are arriving at the Kakao Agit lobby in Seongnam, Gyeonggi Province. / Seongnam = Photo by Kang Jin-hyung aymsdream@
Expansion of CA Council and Reorganization of Control Tower
Last month, Kakao began restructuring its management system centered on the CA Council (formerly the Community Alignment Center), an affiliate coordination body. Kakao had grown by having young CEOs nurture new businesses and manage affiliates independently, but it concluded that this autonomous management system ultimately acted as a 'poison.'
The CA Council now operates with four leaders: Kim Jeong-ho, chairman of the Brian Impact Foundation and former Naver executive (management support), and Jung Seon-ah, CEO of Kakao Ventures (business), joined the council. Kwon Dae-yeol, head of Kakao Policy Center (crisis management), and Bae Jae-hyun, Kakao's Chief Investment Officer (investment), also form the council. However, on the 19th, CEO Bae was arrested on charges of manipulating stock prices during Kakao's acquisition battle for SM Entertainment. With key figures responsible for Kakao and its affiliates' finances, including former CFO Kim and CEO Bae, now absent, the council must reorganize to strengthen the financial line.
Going forward, the council is expected to expand and reorganize into an organization responsible for new business promotion and investment strategies. Additionally, the council will lead efforts to prepare organizational restructuring plans for introducing a new management system and improving internal control systems.
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