A merger between Kakao, the company behind KakaoTalk and Daum, South Korea’s second-largest search engine, was first announced back in May and received approval from Daum and Kakao shareholders in late August. As expected, the merger has now been officially completed, creating a company valued at $9.45 billion USD.
However, the question still remains: can Kakao experience growth outside of South Korea in markets dominated by fellow Asian apps Naver-owned LINE and Tencent’s WeChat as well as other apps like Facebook’s WhatsApp and Microsoft’s Skype?
KakaoTalk is installed on 93 percent of smartphones in its home country, so it obviously has no problems there. However, outside its home turf, the app is virtually unheard of. Indeed, this can even be seen by the fact that KakaoTalk articles are among the least popular here on TruTower when compared to the other messaging apps we cover.
WeChat and Line already have dominance in overseas markets Kakao has been looking at
Daum was also facing expansion woes with a saturated home market, which is also dominated by Naver as the country’s top search engine, so will this merger between the two companies allow them to more easily expand worldwide?
“It really doesn’t look easy,” Justin Lee, an analyst with BNP Paribas in Seoul, told the WSJ. “For messaging apps, grabbing the market share first is important,” but as mentioned, competing apps like WeChat and Line already have dominance in overseas markets Kakao has been looking at.
Only time will tell if KakaoTalk will be able to break into these new markets. Do you think they’ll be successful? Post your thoughts in the comments.