Kakao's market cap surpassed Naver's for the first time during the day. It narrowed the gap that was 17 trillion KRW a year ago and now they stood shoulder to shoulder. The two big tech companies in the Internet sector compete, innovate, and grow together, revitalizing related industries and ecosystems.
During the day of the 14th, Kakao temporarily surpassed Naver’s market cap and ranked the third in the stock market. Even though it did not last until the close, it was the first time that Kakao has ever overtaken Naver and ranked third witha market cap.
Kakao shares reached 141,000 KRW as of 9:10 a.m. on the 14th which was 4.06%(5,500 KRW) increase from the previous day. Kakao’s market cap reached 62.59 trillion KRW which overtook Naver’s 62.58 trillion KRW. As of the close of the market, Naver has again widened its market cap gap with Kakao to about 300 billion KRW, but this could change at any time.
Kakao’s share price has been highly praised for its subsidiaries going public and their expandability. Kakao is planning to go public with ‘Kakao Bank’ and ‘Kakao Pay’ within this year. Both companies are considered as leaders in the fintech industry. Kakao Pay obtained preliminary authorization for non-life insurance.
Kakao Mobility, which operates a taxi business, and Kakao Entertainment, a strong player in the entertainment field, are also pushing to go public. The two companies have high market dominance in their respective industries.
Kakao is trying to recover from its e-commerce business, which is one of the areas lagging behind Naver. Kakao plans to hold a board meeting within this month to decide on a plan to merge its subsidiary,Kakao Commerce, with its headquarters. After Kakao Commerce spun off at the end of 2018, it will be merged with the headquarters again. It is interpreted to compete with key companies such as Naver and Coupang.
Jong-hyun Wi, a professor of BA(Business Administration) at Chung-Ang University, said, “Kakao has proved its mobile platform scalability that lead their rapid progress. Kakao has shown potential for global success by expanding its scope from fintech, mobility, and content business not just within Business-to-Customer (B2C) but also with Business-to-Business (B2B) sector.”
The competition for market cap between Naver and Kakao is regarded as a stimulant for the Internet and startup ecosystems. Beyond the existing portals and messengers, the two companies have recently emerged as big players in the content, e-commerce, and fintech industries. As they have become big players on major takeovers, it grew industry’s market.
Investment in technology enterprise is also an area where the two companies compete in good faith. Naver invested 40 billion KRW in early technology companies over six years only through the startup support organization. For the past several years, Kakao has also boosted the enthusiasm for startups by successfully completing mergers and acquisitions (M&A) of promising technology enterprises such as Locnall Inc. (formerly Kim Gisa, current KakaoNavi), Kakao Games (old engine), and Croquis (Zigzag operator) and others.
Naver and Kakao are also focusing on supporting shared growth for small and medium-sized businesses and providing them with a startup platform. With Naver Financial and Smart Store, Naver supports small and medium-sized businesses with funds and internet startup space. Kakao responded to the demand for less capital startups through Talk Store and Makers. It is evaluated that it has provided a way out to small business owners and self-employed people who are in crisis due to COVID-19.
Competition continues in new industry. Kakao recently started a cloud business. A large data center will be built in Ansan-si, Gyeonggi-do. Following 'Gak' in Chuncheon-si, Gangwon-do, Naver will also build a large data center in Sejong-si. In addition to providing jobs for people, theyalso help small and medium-sized businesses by opening up their cutting-edge infrastructure such as artificial intelligence (AI) solutions and cloud and other technologies.
The two companies also took on with webtoons, web novels, and K-pop. In this process, the Korean content industry served as a gateway to the global market.
Jaehong Choi, a professor at Gangneung-Wonju National University (former outside director of Kakao) said, “Naver and Kakao are not only serving as bridgeheads for Korean companies to advance into the global market, but also protecting domestic companies from giant platforms such as Google.” and he also stated, “The relationship and activities of the two companies after the post COVID-19 will be establishedcloser to mutual cooperation than competition.”
By Staff Reporter Siso Kim(siso@etnews.com)