Naver and Kakao Quicken Entry into Business AI Market

Korean tech giants Naver and Kakao are competing to capture the artificial intelligence (AI) service market.

Naver plans to introduce HyperCLOVA X, its super-scale AI that generates responses based on user needs, to their search engines and other services. HyperCLOVA X is similar to OpenAI ChatGPT but has more learning capacity. It learns Korean 6,500 times better than ChatGPT. 

Additionally, Naver will offer business-to-business (B2B) services and customized solutions for businesses worldwide experiencing data breaches, emphasizing data security. 

To tackle the challenges of commercializing localized services, Naver is placing particular emphasis on developing its generative AI service for Korean users.

In Japan, Naver will introduce enterprise services that integrate HyperCLOVA X with productivity tools such as LINE Works and Naver Works. The company aims to connect AI with its enterprise software, enhancing it into a platform.

HyperCLOVA X – Naver Corporation’s Korean learning model

At a recent conference, Naver’s CEO Choi Soo-yeon announced that HyperCLOVA X. The Korean language learning model, would be released this summer. As the world’s third-largest such model and the first in South Korea, HyperCLOVA X can answer questions using calculators, maps, and other functional APIs. 

In this year’s first quarter, Naver reported consolidated revenues of $2.12 billion (2.804 trillion won), a 23.6% increase from the previous year. Meanwhile, Kakao’s Q1 revenue fell by half due to aggressive investments, recording $53.7 million (71.1 billion won).

Kakao Enterprise, a subsidiary of Kakao Corporation, is conducting a closed beta test (CBT) with select businesses and organisations. The CBT evaluates the suitability of a super-sized AI engine for business customers. The test focuses on deploying security for sensitive business data. Kakao’s technology is still under construction. 

Many companies such as SK Telecom, a South Korean mobile carrier have already allowed the use of generative AI like ChatGPT to enhance productivity through in-house chatbots.

Booming AI market size in Korea

South Korea is quickly becoming a major player in the global AI industry. In 2022, the AI market of the country was valued at $883 million. Experts predict that it will continue to grow at a rate of 14.5 percent between 2023 and 2028.

One major factor for AI expansion is the country’s emphasis on research and development. The government supports strong research infrastructure, including universities and research institutions. The government has also launched several initiatives aimed at advancing AI technologies. Both government and corporate entities like Naver and Kali are investing in digital infrastructure to further support the growth of the AI industry.

Korea’s thriving technology ecosystem is another driver of its AI industry. With a favorable environment for tech-based start-ups, many AI-led technologies are flourishing in the country. 

For example, in February, South Korea entered the AI chip race with startup Rebellions’ new AI chip ‘Atom’. The new chip is designed to compete against Nvidia, a major chipmaker from the US. It excels at running computer vision as well as chatbot AI applications, according to experts.