"For a platform with market dominance, making money is straightforward. By adding profitable services, revenue and operating profit can increase immediately. The challenge lies in addressing the dissatisfaction of existing users caused by excessive commercialization," said a senior executive at Kakao during a meeting in the spring of 2020.
At that time, he expressed little concern about revenue but was worried about user retention, emphasizing that losing users due to aggressive commercialization would lead to a loss of market dominance.
As he predicted, the addition of a few profitable services led to a surge in revenue and operating profit. The external environment was also favorable, with KakaoTalk users showing high loyalty during the COVID-19 pandemic and the online advertising market experiencing explosive growth. It seemed that nothing could halt Kakao's growth.
In June 2021, Kakao's stock price surpassed 170,000 won, earning it the labels of a national stock and a royal stock. That marked the peak, and the decline has continued for five years. Three significant events contributed to this downturn. First, Kakao faced controversy over its decision to spin off Kakao Bank and Kakao Pay for public listing, leading to accusations of 'chop-up listing.' Additionally, the expansion into businesses like flower delivery, hair salons, and taxi services sparked debates over encroachment on local markets.
Critics believed that Kakao's management chose an easy path to profit, neglecting the issues arising from this approach. There were claims that they lost sight of their original intentions.
The final blow came with the 'stock option cash-out' scandal involving Kakao Pay's executives. Just a month after its listing, eight executives, including the CEO, sold 440,000 shares simultaneously, pocketing approximately 90 billion won in profits. This led to a sharp decline in stock prices and prompted the government to introduce a 'stock market cash-out prevention law,' causing significant public outrage.
The executives involved had already made hundreds of millions of won and left the company without hesitation. This departure sparked extreme distrust among employees, who felt that only the executives benefited while the staff was left behind. Despite promoting a culture of horizontal communication and 'crew' dynamics, there was an underlying sense of discord and cynicism. The accumulated structural contradictions have now manifested as labor-management conflicts.
The resignation of the Chief Product Officer, who led a major overhaul of KakaoTalk, further deepened this distrust. After initiating a significant redesign that faced strong user backlash, he left without addressing the concerns. While the circumstances differed, it bore similarities to the previous stock option scandal.
The labor union criticized the executives for abandoning their responsibilities, stating, "They left behind problems and fled again," highlighting the burden now placed solely on the remaining employees to resolve the fallout from management's mistakes. This perspective illustrates the profound depth of the labor-management conflict at Kakao.
CEO Jeong Shin-a apologized and initiated organizational restructuring to mend relations, but restoring the shattered trust will require far more than superficial fixes. Rebuilding lost trust demands a time investment several times greater than what was initially lost. The issues created by past management must be addressed by the current leadership, as they are responsible for the company.
As Kakao enters the AI era, its competitors are forming alliances with global tech giants to enhance their competitiveness. Each is finding its own direction. If Kakao ultimately falls behind in the AI race, the consequences will again fall on the employees left behind. Once more, the executives may depart, deepening the distrust among staff.
The only solution is to break the cycle. It will be difficult to resolve issues through forced concessions where both sides take a step back. The management must provide assurance that they are completely severing ties with the past, where short-term results took precedence over employee welfare. Continuous understanding and responsible management are the only ways to eliminate the distrust that has built up over the past five years.
* This article has been translated by AI.
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