The competitive landscape of South Korea's portal and platform market, traditionally dominated by Naver and Kakao, is undergoing a transformation centered around artificial intelligence (AI) technology. The focus has shifted from keyword searches and traffic acquisition to integrating large language models (LLMs) and AI agents into existing platforms.
On June 17, the IT industry reported that AI company Upstage has entered the domestic portal and platform market by acquiring Daum's operator AXZ and the AI agent platform Timely. Upstage plans to enhance its AI-driven portal service competitiveness by integrating its own LLM, Solar, with Daum's search and content assets.
With Upstage's entry, the long-standing duopoly of Naver and Kakao in the domestic portal and platform market faces potential changes. Naver has established itself as the largest portal operator in South Korea, leveraging its search, shopping, and content services, while Kakao has expanded its influence through its mobile platform, centered around the KakaoTalk service, which boasts 45 million monthly active users.
Once a leading portal, Daum's presence diminished under Kakao's ownership since the 2000s. However, the integration of Upstage's LLM technology presents an opportunity for Daum to be revitalized as an AI-driven portal platform.
According to industry sources, the domestic platform market is evolving from a focus on 'keyword input' to 'context understanding' based on AI agents. Traditional portal services responded to user queries through 'search' functions, while AI agent platforms are designed to comprehend user intent and perform tasks ranging from search to recommendations and purchases. In this context, each company's LLM has emerged as a key technology to retain users on their platforms and increase engagement time and frequency.
Upstage's strategy aims to transition from being solely an AI model company to a platform operator by combining portal and agent services. Kim Sung-hoon, CEO of Upstage, stated at a press conference on June 16 that the competition in generative AI is shifting from 'chatbots' to 'AI agents' that perform actual tasks. Upstage believes it can enhance AI-driven portal services by integrating Solar with Daum's language data, including news, search, and comments.
Naver and Kakao are also accelerating their transitions to AI agents. They are leveraging their established platform ecosystems and user infrastructure to present a seamless experience that connects search with task execution.
Naver's strategy focuses on integrating its existing services—search, shopping, and payments—into an AI-enhanced user experience. Since last year, Naver has been strengthening its 'AI Briefing' service, which utilizes the AI language model HyperCLOVA X to go beyond keyword-based searches and understand user intent in natural language queries, linking it to recommendations, exploration, and purchasing actions.
Kakao is concentrating on transitioning its mobile messenger KakaoTalk into an AI agent platform this year. Its 'AI onboarding' strategy aims to seamlessly introduce AI services to its 50 million users within the KakaoTalk chat interface, allowing users to experience AI naturally in their daily interactions.
Kakao emphasizes that its mobile-based platform strategy enhances competitiveness in a market centered around web-based agents. Since KakaoTalk is a service where users do not need to enter a separate search bar, it can naturally connect AI with conversation, recommendations, gifting, and content consumption. Kakao is also developing a next-generation model, 'Kanana 2.5,' optimized for AI agent platforms, focusing on improving learning costs and inference speed with its 'Kanana Tokenizer' to strengthen lightweight AI models.
An industry insider remarked, "As AI agents become more prevalent, competition for services optimized for the Korean language environment in the domestic search and platform market is becoming increasingly important. The competition will hinge not just on technology but on who can first prove a monetization model that translates into actual revenue and business success."
* This article has been translated by AI.
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