Kakao taps venture capital unit head as new CEO to lead reform

Kakao Corp., South Korea’s top mobile platform under fire for its extremely aggressive business expansion, tapped its venture capital unit head as the new CEO to reform the startup-turned-conglomerate.

Kakao Corp. said on Wednesday its CEO nomination committee appointed Chung Shina, CEO and managing partner of Kakao Ventures Corp., a wholly owned subsidiary of the operator of the country’s dominant mobile messaging app KakaoTalk, as its new chief executive.

Chung is scheduled to replace current Kakao Corp. CEO Hong Euntaek and take office in March 2024 through approval by a general shareholders’ meeting and a board of directors’ meeting.

“I feel a great sense of responsibility and duty to take over the new leadership at this critical time,” Chung said in a statement.

“To meet the society’s expectations and standards, we will actively work for responsible management rather than autonomous management only for growth while focusing more on future core business sectors,” she said. “Kakao doesn't have a lot of time, so we will not miss the timing of change.”

Once Chung is inaugurated, South Korea’s two largest internet behemoths will be managed by female executives as Choi Soo-yeon took the reins of Naver Corp., the leading local online platform, in March 2022.

The appointment came two days after Kakao Corp. founder and chairman Kim Beom-soo, known as Brian Kim, warned of a management reshuffle for reforms, saying the company would abandon its autonomous management system.

Kakao Corp. is facing the toughest time in its 13-year history as South Korea has been stepping up probes into the company over alleged violations of the Capital Markets Act and unfair business practices.

Since its establishment in 2010, Kakao Corp. has grown exponentially to become South Korea’s 15th-largest conglomerate thanks to the rapid penetration of smartphones. Its businesses sprawl from mobile messaging to taxi-hailing, mobile banking, entertainment, games and healthcare. It has 146 subsidiaries, including 10 listed ones, as of the end of June.

However, the company has been criticized for poor corporate governance given its market position.

TO LEAD CHANGE

Chung is suited to leadership for new changes as she has expertise and experience in the information technology sector with a good understanding of the challenges at all stages of a company’s growth, Kakao Corp. said.

Chung, who earned an MBA from the University of Michigan, worked at Naver, eBay Inc. and Boston Consulting Group Inc. before joining Kakao ventures in 2014.

She has led the venture capitalist since 2018, investing in startups in various industries such as artificial intelligence, robots, mobile platforms and game sectors.

The appointee was known as one of Kim’s key trusted executives and listed as a strong candidate in previous top management reshuffles.

Chung joined Kakao Corp.’s board as a non-executive director in March to study its businesses and services. Chung was named as the head of the business division at the corporate alignment council, which was launched in September to coordinate the strategic direction of Kakao Corp. and its subsidiaries. Currently, she is a standing member of the management reform committee.

She is set to head the company’s reform task force as a CEO appointee, setting the direction for Kakao Corp.’s improvements and managing missions in detail.

“Chung is expected to ensure Kakao’s internal stability while securing future growth engines centered on AI,” Kim told employees in an internal message.

FURTHER RESHUFFLES

Kim is expected to shuffle or replace other executives to regain trust amid the growing legal risks surrounding top managers as 77 affiliate CEOs are scheduled to complete their terms in March or April 2024, industry sources said. They are keeping an eye on potential replacements of CEOs at key affiliates such as Kakao Entertainment Corp. Kakao Mobility Corp. and Kakao Games Corp.

Kakao Entertainment was at the center of the government’s probes across the mobile giant.

South Korean prosecutors have been investigating Kim, Hong and other Kakao Corp. executives over alleged stock manipulation in the company’s acquisition of K-pop pioneer SM Entertainment Co. earlier this year. On Oct. 26, Bae Jae-hyun, chief investment officer of Kakao Corp. and two unidentified senior investment managers of the company were arrested under an investigation into the acquisition process.

Kakao Entertainment is also under probe on allegations that the company took over a local drama production studio at an excessive price.

The Korea Fair Trade Commission (FTC) has launched an investigation into Kakao Mobility's commission charging system.

Making things worse, the antitrust agency's probe could pose an obstacle to the tie-up between Kakao Entertainment and SM Entertainment.

Write to Seung-Woo Lee at leeswoo@hankyung.com
 

Jongwoo Cheon edited this article.