Upstage strikes to amass Daum as Kakao accelerates shift away from portal enterprise

Inventory-swap deal highlights how legacy web platforms are adapting to the AI period

Upstage has taken a decisive step towards buying Daum, as Kakao Corp. pushes forward with plans to exit the normal portal enterprise and refocus on synthetic intelligence. The proposed transaction, structured as a inventory swap, would mark a notable change in South Korea’s web panorama practically a decade after Kakao’s landmark merger with Daum.

Upstage and Kakao mentioned on Thursday that their boards had cleared a memorandum of understanding for a share-swap deal. As a part of the association, Kakao will hand over its possession in AXZ, the entity that runs Daum, to Upstage, and can as an alternative take a stake within the AI startup. AXZ is presently absolutely owned by Kakao, whereas key phrases comparable to valuation, change ratios, and the completion schedule can be decided following due diligence and a last settlement.

The deal is broadly considered as symbolic for Korea’s web trade. Based in 1995 by Lee Jae-woong, Daum is usually described because the nation’s first web portal. It performed a formative function in shaping Korea’s on-line tradition by way of companies comparable to Hanmail, which helped popularize e-mail, and Daum Cafe, which turned a cornerstone of on-line communities.

Nevertheless, Daum’s affect light because the market shifted towards mobile-first companies and, extra just lately, AI-driven platforms. Though the 2014 merger with Kakao created certainly one of Korea’s largest IT teams, Daum struggled to regain momentum in an atmosphere more and more dominated by messaging apps, cellular search, and customized AI companies.

Kakao’s gradual exit from the portal enterprise

In recent times, Kakao has steadily decreased its publicity to non-core companies. The corporate spun off Daum’s operations in 2023 and later reorganized them beneath AXZ as a part of a broader effort to simplify its company construction and focus on key development engines.

The deliberate switch of AXZ to Upstage would mark Daum’s first full separation from Kakao in additional than 10 years. For Kakao, the fairness swap permits it to streamline its portfolio whereas sustaining a stake in a rising AI firm, fairly than making a clear exit by way of a conventional sale.

Trade observers see the transfer as in keeping with Kakao’s broader technique of pursuing AI competitiveness by way of partnerships and selective investments, fairly than relying solely on in-house mannequin improvement.

What Upstage beneficial properties from Daum

For Upstage, the acquisition gives one thing uncommon for an AI startup: entry to a big, established client platform. The corporate plans to deploy its giant language mannequin, Photo voltaic, throughout Daum’s companies, utilizing many years of Korean-language information gathered from information articles, blogs, and group posts.

This mix of proprietary AI know-how and long-running user-generated content material might assist Upstage speed up mannequin coaching and develop AI companies aimed toward mass public use, fairly than enterprise-only purposes. The corporate can also be broadly seen as making ready for a possible preliminary public providing later this 12 months, with the Daum deal anticipated to strengthen its development narrative.

Implications for Korea’s AI ecosystem

The transaction might additionally bolster Upstage’s place in government-led AI initiatives. The corporate has already handed the primary spherical of a nationwide venture to develop a homegrown AI basis mannequin, alongside companies comparable to SK Telecom and LG AI Analysis. Analysts say entry to Daum’s platforms and information might enhance its standing in later levels, the place real-world deployment and proprietary fashions carry vital weight.

Upstage plans to collaborate with consortium companions together with MakinaRocks, Vuno, Finda, and the Korea Electronics Know-how Institute to broaden AI purposes throughout:

• Manufacturing
• Well being care
• Finance
• Public companies
• Search and portal companies

This might finally place Upstage in direct competitors with AI-powered search choices from rivals comparable to Naver and Google, however utilizing its personal Photo voltaic mannequin fairly than third-party know-how.

Strategic alignment, not simply an asset sale

Executives on each side have emphasised that the deal is about long-term alignment fairly than a easy switch of belongings. Kakao retains publicity to AI development by way of its stake in Upstage, whereas Upstage beneficial properties scale and visibility by way of Daum’s nationwide person base.

“By combining Upstage’s AI know-how with Daum’s person base, we are able to create an atmosphere the place extra folks naturally use AI of their every day lives,” mentioned Sung Kim, co-founder and chief govt of Upstage.

If accomplished, the transaction might function a case examine in how legacy web platforms and next-generation AI startups reposition themselves amid fast technological change—mixing established attain with rising AI capabilities fairly than treating them as separate paths.