SEOUL, May 07 (AJP) - In a bid to build South Korea's sovereign AI foundation model, Upstage, one of the country's artificial intelligence powerhouses, has finalized the acquisition of web service portal Daum for an undisclosed amount, the AI company said Thursday.
Daum is South Korea's iconic web service that was launched in 1995 as an arts and entertainment service portal. The service gradually upgraded to add other services such as web search, email, online magazine, and news to garner more than one million registered users in 1998. The web service's operator Daum Communication, later merged with messenger app giant Kakao to become Daum Kakao in 2015, and Daum's operating division was separated by Kakao in December 2025 into a subsidiary named AXG.
According to Upstage, the acquisition deal was signed as a share swap, with the AI company acquiring the entire 100 percent stake in AXZ held by Kakao, while Kakao received newly issued shares in Upstage in return. The acquisition was made about three months after Upstage and Kakao signed a memorandum of understanding (MoU) in January this year.
Through the acquisition of the web service portal, Upstage plans to combine its Solar large language model (LLM) with Daum's web search engine and context data to build "Context AI," a service designed to understand user intent and context rather than just matching keywords. Upstage said that the acquisition will eventually lead the company to develop a next-generation AI portal built on South Korean technology and data.
"The combination of Upstage's technology and a 30-year-old national portal will mark a symbolic turning point for the AI industry, opening a new era of AI portals," Upstage CEO Kim Sung-hoon said in a statement.
One of the central questions surrounding the deal concerned Daum's workforce. Upstage said Daum will continue to operate as an independent legal entity with no personnel changes. The company also pushed back against speculation that Daum's user data would be funneled into Solar's training pipeline.
Bae Sung-beom, technical communications lead at Upstage, told AJP in a written response that the term 'training' in the LLM context refers specifically to the pre-learning and post-learning of foundation models and does not mean user data will be used for the machine learning of AI systems.
"This kind of data is absolutely not used," Bae said. "It is impossible without the consent and cooperation of users, who are the data subjects. And even with consent, it must comply with relevant laws, including the Personal Information Protection Act."
For Upstage, the acquisition lands at a pivotal moment. The 2020-founded company became South Korea's first generative AI unicorn last year after an 180-billion-won ($130 million) Series C round and has signaled plans for a KOSPI listing this year.
Its Solar Pro 2, released last summer, became the first Korean-developed LLM ranked as a global frontier model. The current model, Solar Pro 3, was released in March. Upstage is also leading one of four consortia in South Korea's national "sovereign AI" project.
For Kakao, this deal allows it to monetize a long-stagnant asset while preserving indirect exposure through its new equity stake in Upstage, a common pattern as the conglomerate retreats from non-core businesses amid regulatory pressure.
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