South Korea's two largest technology platforms, Naver and Kakao, have embarked on strikingly different artificial intelligence strategies in September 2025, creating a fascinating case study in how tech companies approach AI development. For American readers, imagine if Google and Meta decided to take completely opposite approaches to AI - that's essentially what's happening in South Korea's tech landscape right now.
Naver has doubled down on a "sovereign AI" strategy, developing its own large language model called HyperCLOVA X, while Kakao has chosen to partner strategically with OpenAI, integrating American AI technology into its core services. This divergence represents more than just different business strategies; it reflects fundamental philosophical differences about technological independence versus global collaboration.
Kakao's OpenAI Partnership: The Silicon Valley Model
Kakao's approach mirrors what many Silicon Valley companies have done - partnering with OpenAI to rapidly integrate cutting-edge AI capabilities. At the company's "if(kakao)25" conference held from September 23-25 at the Kakao AI Campus in Yongin, CEO Jung Shin-ah unveiled the fruits of this collaboration. The conference theme, "Possibility Becomes Daily Life," showcased how Kakao plans to transform from a traditional platform company into what they call an "AI native enterprise."
For American readers familiar with how companies like Microsoft integrated OpenAI's technology into Office and Windows, Kakao's approach is remarkably similar. The centerpiece is "Kanana AI," launching in October 2025, which will function as a comprehensive AI stack covering infrastructure, proprietary language models, middle-layer protocols, AI agents, and consumer-facing services. Think of it as Korea's answer to Microsoft's Copilot integration across its ecosystem.
The most significant integration will occur within KakaoTalk, Korea's dominant messaging platform used by over 90% of the population - making it more ubiquitous than iMessage in the United States. Kanana AI will serve as a "middle layer" within KakaoTalk, understanding user context and executing intended actions directly within the chat interface. This level of integration goes beyond what most American platforms have achieved, potentially offering a glimpse into the future of AI-native communication platforms.
Kakao's partnership with OpenAI, announced in February 2025 with both CEO Jung Shin-ah and OpenAI's Sam Altman present, marked OpenAI's first strategic alliance in Korea. This collaboration involves technical cooperation and joint product development, with Kakao utilizing OpenAI's latest APIs in KakaoTalk and Kanana while also adopting ChatGPT Enterprise for internal operations.
Naver's Sovereign AI: Building a Korean Google
Naver's strategy represents a fundamentally different philosophy - one that prioritizes technological sovereignty over rapid market deployment. For American readers, imagine if Google had developed its search algorithm using exclusively American data and cultural context, then expanded globally with that foundation. That's essentially Naver's approach with HyperCLOVA X.
Since launching Korea's first major large language model, HyperCLOVA, in 2021, Naver has invested heavily in developing its own AI capabilities. The current flagship model, HyperCLOVA X, was trained on 6,500 times more Korean language data than OpenAI's GPT-4, giving it superior performance in understanding Korean language, culture, and context. This is particularly important in a country where cultural nuances and language subtleties can significantly impact AI effectiveness.
Naver's "on-service AI" strategy is already showing results that rival Silicon Valley companies. The company has integrated AI technology into search, commerce, and content services, automating email analysis and schedule management while driving traffic increases, user engagement improvements, and revenue growth across advertising, commerce, and fintech sectors. This mirrors how Google has integrated AI across its product ecosystem, but with a distinctly Korean focus.
The company plans to expand its AI-powered services internationally, strengthening webtoon, works, and robot services in Japan while expanding to the United States, Europe, and Saudi Arabia. This represents an interesting reversal of the typical tech flow - instead of American companies expanding to Asia, a Korean AI platform is preparing to compete globally with homegrown technology.
Government Policy and Market Implications
The contrasting strategies of these two companies reflect broader tensions in global technology policy. South Korea's government has launched a "sovereign AI" initiative, similar to efforts in Europe and China to reduce dependence on American AI technology. Five consortiums led by LG AI Research, SKT, Naver, NC AI, and Upstage are participating in this initiative, aiming to develop sovereign AI foundation models that achieve at least 95% of the performance of frontier models like ChatGPT.
For American readers, this is comparable to the CHIPS Act's efforts to rebuild semiconductor manufacturing capacity in the United States - it's about maintaining technological independence in critical areas. The participating companies include LG's Exaone, Naver's HyperCLOVA X, Upstage's Solar Pro, SKT's A.X series, Kakao's Kanana, and NC AI's Varco, creating a diverse ecosystem of Korean AI development.
Interestingly, the rise of Chinese AI startup DeepSeek has provided encouragement for Korean companies. DeepSeek's demonstration that high-quality AI can be developed with lower costs and open-source approaches has shown that massive investment isn't the only path to AI competency. This development has implications for the global AI landscape, potentially democratizing AI development beyond the current Big Tech oligopoly.
Lessons for American Tech Policy
The Korean case offers valuable insights for American policymakers and tech companies. While the United States currently leads in AI development, the Korean example demonstrates how countries can pursue different strategies - either leveraging American technology through partnerships or developing independent capabilities.
Industry experts predict that the divergent strategies of Naver and Kakao will ultimately benefit Korea's entire AI ecosystem. The dual approach of indigenous technology development and global collaboration creates a more resilient and diverse technological foundation. This model could inform American thinking about how to maintain technological leadership while fostering innovation diversity.
As of September 2025, both companies are building differentiated market positions through their respective strategies. This competition is driving diversity and innovation in Korea's AI ecosystem, creating a natural experiment in different approaches to AI development and deployment. The outcomes of Kakao's OpenAI partnership and Naver's sovereign AI capabilities will provide valuable data points for the global tech industry.
For American readers observing this development, the Korean case illustrates how smaller markets can still pursue independent technological strategies, even in an era of global tech giants. Whether this leads to genuine technological alternatives or ultimately reinforces existing patterns remains to be seen, but the Korean experiment deserves close attention from anyone interested in the future of global technology competition.
Read the original Korean article: 네이버·카카오 AI 플랫폼 전면전 점화, 주권형 AI vs 글로벌 제휴 양분
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