KB News Desk
Platform giants control paces of investment amid questions on monetizing AI services
By Nam Hyun-woo
Korean platform giants Naver and Kakao both reduced their R&D expenses in the first half of this year despite their visions to expand their presence in the field of artificial intelligence (AI).
According to Naver’s semiannual report published Wednesday, the portal giant spent 898.8 billion won in the first half, down 6.86 percent from 965 billion in the first half of last year.
This is the first time Naver’s first-half R&D expenses have declined since 2020, when the company’s R&D spending began to show sharp growth.
In the first half of 2020, the company spent 621.3 billion won and the amount quickly increased to 965 billion won in the first half of last year as it concentrated its resources on developing AI models and services. In the company’s semiannual report, the majority of its completed or ongoing R&D projects since 2020 have been centered around AI.
The situation is similar for Kakao. Its semiannual report showed that the platform giant spent 649.9 billion won on R&D in the first half of this year. The amount grew by 19.3 percent compared to 544.7 billion won in the first half of 2023 but decreased by 4.27 percent compared to the 678.9 billion won in the second half of last year.
The slowing investments run counter to the companies’ respective plans to make AI-related services their new growth engines.
“The company has been making efforts to improve its AI-based products,” Naver CEO Choi Soo-yeon said during the company’s second-quarter earnings call on Aug. 9. “We will continue to leverage AI and data to provide differentiated experiences for our users in the second half.”
Kakao CEO Chung Shin-a also said in the second-quarter earnings call on Aug. 8, “We have identified that innovation through KakaoTalk and AI services is the company’s primary focus.”
Despite the CEOs’ pledges, the companies’ slowing investment curves suggest that they are making a prudent approach toward the growth potential of their respective AI services amid increasing worries that the worldwide AI frenzy may end up being a bubble.
Naver debuted its HyperCLOVA X hyperscale AI platform and CLOVA X generative AI service with hopes of challenging OpenAI but has yet to come up with any breakthrough monetization plans.
Kakao also has been reiterating its intention to reveal its own AI model, KoGPT 2.0, since the first half of last year, but has yet to do so after over a year. Instead, the company said it is now focusing on AI-based services.
Naver’s share price closed at 157,500 won on Friday, shedding 8.22 percent over a month from 171,600 won on July 16. Kakao also declined by 10.64 percent to 36,550 won on Friday from 40,900 won on July 16.
