Kakao Breathes Sigh of Relief on Kim Beom-su's Acquittal, Focus Shifts to AI and New Business Revitalization

Founder's Legal Risk Eliminated, Resolving Management Uncertainty

On the Cusp of Integrating AI into KakaoTalk... Founder Kim's Return to Front Lines Remains Uncertain

Kim Beom-su, Kakao Chairman, Acquitted in SM Share Manipulation Case in First Trial (Seoul=Yonhap News) Reporter Hong Hae-in = Kim Beom-su, Chairman of Kakao's Management Reform Committee and founder of Kakao, who was suspected of colluding in SM Entertainment's stock price manipulation, is leaving the courthouse after the first trial verdict at the Seoul Southern District Court in Yangcheon-gu on the 21st. 2025.10.21 hihong@yna.co.kr

With Kakao founder Kim Beom-su acquitted in the first trial for charges of manipulating SM Entertainment's stock prices, the Kakao Group has overcome a major hurdle.

For Kakao, which has faced a relentless storm of internal and external challenges, the resolution of management uncertainty is expected to provide an opportunity to push forward with core new businesses, including artificial intelligence (AI), on which the group's future hinges.

Kakao stated in a press release immediately after the verdict on the 21st, "We are grateful for the court's wise ruling," emphasizing that "Kakao has been misunderstood as an unethical company that manipulates stock prices, and the first trial verdict has confirmed that such misunderstandings were inappropriate."

The company added, "The Kakao Group experienced numerous difficulties due to the investigation and trial that lasted for 2 years and 8 months. It was painful that we were unable to respond agilely to rapid market changes," and vowed to "make even greater efforts to make up for this and fulfill our social responsibilities."

Founder Kim also told reporters after the trial, "I hope this can be an opportunity to shed at least some of the shadow of stock manipulation and price rigging that has loomed over Kakao," expressing his expectations for an improvement in the brand image going forward.

A company official remarked, "Although he has stepped down from management, Founder Kim's position within Kakao is absolute. With the not-guilty verdict in the first trial, the group feels as though it has grown wings and has seized the opportunity to drive forward with new businesses, including AI."

Earlier, the Seoul Southern District Court acquitted Founder Kim, Kakao Corp., and Kakao Entertainment on all charges of violating the Capital Markets Act.

Founder Kim had been on trial for allegedly manipulating stock prices by fixing the stock price higher than a competing bid from HYBE[352820] to prevent HYBE's public tender offer during the acquisition of SM Entertainment in February 2023.

Kakao Pangyo A-git [Yonhap News Data Photo. Reproduction and DB prohibited]

He faced personal hardships, including being detained for 100 days in a detention center after being arrested in August last year, undergoing surgery for cancer and follow-up surgery due to deteriorating health, and being repeatedly hospitalized and discharged.

In March, just before his second surgery, he stepped down as chairman of the CA Council, the group's highest decision-making body, casting a pall of crisis over the entire group.

Consequently, although further legal proceedings remain, industry insiders in the ICT (Information and Communications Technology) sector believe that Chairman Kim's acquittal will allow Kakao to shed its biggest risk—its leader's legal entanglement—and revitalize the company's subdued atmosphere.

Kakao Group, which has been struggling with multiple legal risks, has undergone extensive restructuring by divesting non-core businesses and reducing its number of affiliates to single digits. However, it has been criticized for not aggressively investing in and innovating in core areas like AI, unlike its competitor Naver, amidst the turbulent environment.

Moreover, in the recent overhaul of KakaoTalk, the group's core platform after 15 years, user complaints surged regarding the redesign of the Friends tab, leading to struggles in stock price and other aspects.

With significant initiatives on the horizon, including the integration of OpenAI's ChatGPT and its own AI, Kanan, into KakaoTalk at the end of this month, being able to resolve the owner's risk beforehand is a crucial empowering factor for the group.

The first trial's not-guilty verdict for both Founder Kim and Kakao Corporation has also removed a risk factor concerning its qualification as a major shareholder of Kakao Bank[323410].

Under the current Internet Banking Act, industrial capital entities are prohibited from holding more than a 10% stake in financial institutions if they have received a fine or violated other laws within the past five years. If eligibility issues arise, Kakao would be required to divest its Kakao Bank shares exceeding 10% within six months.

As of the end of June, Kakao is the largest shareholder of Kakao Bank, holding a 27.16% stake.

However, it is unlikely that Founder Kim, who has caught his breath, will immediately return to management.

Some in the industry have pointed out that Founder Kim's absence itself has been Kakao's biggest setback, especially when compared to Naver founder Lee Hae-jin's return as chairman of the board, which has led to aggressive new business drives, including mergers with Dunamu.

A company official stated, "Founder Kim needs to focus on his treatment and recovery for now," adding, "It is difficult to predict the timeline for his return at this moment." Yonhap News