● Kakao Dumps Daum, Upstage Stock Swap Power Play
Next, Leaving Kakao’s Orbit for “Upstage”? 7 Reasons This Deal Truly Matters
Daum’s acquisition is not “a case of a portal simply changing owners,”
but a major play in which a first-generation Korean internet platform is being repurposed as material for “AI search, content distribution, and an IPO strategy.”
This article includes the following.
Why Upstage chooses “Daum” specifically (not surface-level, but based on money/structure/timing)
What it means that Kakao receives only equity with no cash (including governance-risk implications)
The trap in the estimated 300 billion KRW revenue figure for Daum and why “real take-home profit” is the core point
Three obstacles that must be solved to reach a Korean-style Perplexity (LLM search)
A roadmap for what can realistically be done and when, including unions, PMI, and the Dokpamo national AI schedule
1) One-line breaking update (news-style summary)
A plan is being 추진ed for Upstage to acquire Kakao’s “Daum operating entity (AXG).”
Rather than a cash transaction, a stock swap is considered most likely, where Upstage issues new shares and gives equity to Kakao.
If the deal closes, Daum is highly likely to be separated from Kakao and reorganized “under Upstage.”
2) Cast/Company Summary: Upstage vs Daum (current health comparison)
2-1. What kind of company is Upstage?
Upstage is a B2B-focused AI startup, with a strong pool of core talent to the extent it is nicknamed “Korea’s AI Avengers.”
It is especially known for capabilities in LLMs (large language models) and OCR (document recognition/structuring).
The key takeaway is this.
It makes money (cash cow) by turning financial/enterprise documents into data based on OCR,
and on the LLM side it is aiming for expansion (scale).
2-2. What state is Daum in right now?
Daum was once a portal on par with Naver, but it is widely assessed that its search share and brand influence have fallen significantly.
It is currently operated within Kakao as an independent corporation, and its headcount is mentioned at roughly 300–400 people.
Daum’s revenue model is centered on the traditional portal structure (search ads/display/channeling),
while major pillars like webtoons and commerce have already moved to other Kakao organizations/subsidiaries, leading to an interpretation that “only the portal shell remains.”
3) Deal structure (most important): Why a “0 cash” equity deal is the core point
3-1. Structure: Take 100% of AXG, and Kakao receives Upstage equity
The broadly known big picture is as follows.
Upstage brings the “Daum operating entity (AXG)” fully under its subsidiary structure at 100%,
and in return, Upstage issues new shares and transfers equity to Kakao.
This structure is not a simple M&A; in fact, it is closer to “Kakao climbing aboard Upstage as a strategic investor (SI).”
The key takeaway to watch is just one thing.
What percentage of Upstage equity Kakao receives.
3-2. Governance risk: Kakao could become the largest shareholder
According to the original text, the combined stake of Upstage’s CEO/CTO is mentioned as being in the 30% range.
If the stake Kakao receives becomes large, an issue may arise where Upstage is consolidated into the Kakao group (or subject to comparable influence).
Why is this a problem?
Because group consolidation brings regulation, disclosures, management autonomy constraints, and even duplicate-listing controversies all at once.
This is why people say that it “may not be the ending either Upstage or Kakao wants.”
4) The real reasons Upstage wants to buy Daum: 3 points (with priority)
4-1. Priority 1: Securing a “revenue engine” to complete the IPO narrative
This is the most persuasive point presented in the original text.
Upstage’s revenue is growing fast (2024 revenue of 13.8 billion KRW is mentioned), but costs are also high, so losses are large.
To justify a high valuation, the market needs “scaled revenue” it can accept.
So the textbook strategy startups often use appears.
“Acquire a company with revenue, increase consolidated revenue, and receive a higher valuation multiple.”
This is even more important in an environment like today where interest rates and liquidity matter.
Ultimately, this deal is highly likely to be more about valuation and the IPO story than about “technical synergy.”
(From a blog SEO perspective as well, keywords like “IPO,” “valuation,” and “startup investing” naturally fit here.)
4-2. Priority 2: B2B alone has limits → To expand to B2C, you need a “channel (MAU)”
The domestic B2B AI solutions market clearly generates money, but it has the limitation that “it is hard to continuously justify a multi-trillion-won valuation.”
So if Upstage’s dream is a B2C service like a Korean-style Perplexity (LLM-based search/answers),
do you know what is most expensive? Not the technology, but “distribution.”
Daum has portal/community traffic with meaningful MAU,
and Upstage can immediately secure a “real user base” on which to run experiments by layering AI search/summaries/agent-like services.
In other words, precisely because Daum’s search share has declined,
it can serve as a testbed where legacy can be boldly rebuilt and AI search experiments can be attached more easily.
4-3. Priority 3: “Data” is only a bonus; it is not the main point
Many say “the acquisition is because of Daum data (Cafe/news/posts),” but the conclusion in the original text is fairly clear.
Public data is already all over the internet, and truly exclusive data unique to Daum is limited.
Some closed community data like Cafe could matter,
but because legal consent/terms of service/scope of AI training use are involved, it is hard to view it as the “main reason.”
5) 300 billion KRW revenue for Daum? The trap you must see when interpreting the number
5-1. It is risky to mistake “portal biz = Daum”
Kakao IR leads some to estimate portal-biz revenue at around 300 billion KRW,
but this can include various advertising revenues across the Kakao ecosystem, not just Daum.
Also, ad execution is often purchased not “separately for Daum” but as part of bundled Kakao ad platforms, so
how revenue attribution is organized after separation is a key variable.
5-2. More important is the “net profit structure”
Honestly, what the market truly wants to know is this, more than revenue.
What the cost structure of the Daum entity looks like (labor/infrastructure/marketing/partnership fees),
whether operating profit remains, and if so, how much remains.
From Upstage’s perspective as well, if Daum provides “cash generation,” it is the best-case scenario, but
if margins are thin, consolidated results may grow while persuading investors could be harder than expected.
6) Four post-deal scenarios: Where will Daum go?
6-1. Scenario A: Rebranding into a “Korean-style AI search” (the biggest dream)
Rebuild the Daum main page around AI search/summaries/Q&A,
and push “source-based answers” and “exploratory search” hard like Perplexity.
The conditions for success are clear.
Search quality (hallucinations/sources/freshness)
Content/media relationships (traffic allocation/copyright/revenue sharing)
Ad model (redesigning search ads, transparency of native/sponsored)
6-2. Scenario B: Use Daum as an “AI service distribution channel,” while keeping the main base in B2B
Rather than forcing a revival of the portal core business,
Upstage keeps Daum as a traffic testbed and brand touchpoint,
while growing B2B (finance/enterprise) revenue further.
Realistically, this may be the most stable plan.
6-3. Scenario C: Cost efficiency (restructuring/reorganization) issues erupt first
Startup culture and a portal operations organization have different textures.
If headcount/organizational reshuffling emerges during PMI, union variables may be layered on top.
6-4. Scenario D: “It just slowly declines like Nate”
For portals, natural decline is the default if there is no innovation.
A deal does not automatically mean a rebound.
(That is why if Upstage cannot show “service innovation,” market expectations can cool quickly.)
7) Connection to Dokpamo (national AI project): The influence is “intentional, but time is tight”
Upstage is a participating company in the Dokpamo project,
and by acquiring Daum it may have room to argue that it has secured service operations experience, brand, and a channel.
However, the realistic timeline is the problem.
Due diligence → term negotiation → definitive agreement → PMI takes months, and
if the evaluation schedule (August per the original text) is imminent, the time for “acquisition effects to become visible” may be limited.
8) Only the most important points that other news/YouTube are likely to miss
8-1. The essence of this deal is likely not “portal revival,” but “capital-market-oriented structure design”
People fixate on “Will Daum come back to life?” but
from an investor perspective, the number one question is “What financial story will Upstage use to justify its valuation?”
In other words, Daum may be a core component not of the product but of the financial/IPO narrative.
8-2. The moment Kakao takes equity instead of cash, Kakao’s goal becomes “options,” not “a sale”
A cash sale ends the relationship, but
the moment it receives equity, Kakao enters a structure where it shares in the upside of Upstage’s growth.
This could also become a detour route for Kakao to overturn the assessment that it is “behind in AI.”
8-3. A scarier variable than Daum’s revenue is “who owns the ad contracts”
If portal biz is bundled, then after separation, “who owns the advertisers/data/inventory” changes practical value (enterprise value).
If this is not resolved, deal valuation can swing significantly in the market.
8-4. Cafe data can be blocked by “law/trust” issues more than “technology”
AI training/use may be technically possible, but
if you stumble on user consent/terms/copyright/privacy issues, the brand can be hit immediately.
Rather, Daum’s biggest asset may be not data but “user community trust.”
9) Key watch points going forward (investment/industry checklist)
Upstage valuation methodology (multiple vs revenue, selection of comparables)
Kakao’s equity percentage (possibility of group consolidation)
Whether Daum’s operating profit/cost structure is disclosed
How the ad platform/contracts are redefined after separation
Organizational reshuffling during PMI and union agreements
When and in what form AI search/summaries are actually added to Daum (product launch timing)
< Summary >
Daum’s acquisition is not a portal-revival event, but a deal tied to Upstage’s IPO, valuation, and B2C expansion strategy.
If it is transacted via equity with no cash, it becomes a structure where Kakao shares in the upside of Upstage’s growth, and governance risks also arise.
Daum’s key value lies less in “data” and more in MAU/channel/operational capability, and the real variables are ad revenue attribution and the cost structure.
To build a Korean-style Perplexity (LLM search), the battleground is not technology but product design, copyright, ad models, and trust architecture.
[Related posts…]
Korean AI market outlook: The 2026 battleground is “services” and “distribution”
Tech IPO trends: What happens when PSR and valuation change
*Source: [ 티타임즈TV ]
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