It has been a challenging week for Kakao as the company navigates user feedback and market expectations. On September 23, Kakao boldly unveiled plans to transform its flagship KakaoTalk messaging app into a social platform reminiscent of Instagram, aiming to enhance advertising revenue by engaging users more deeply. However, just five days later, the company opted to retract this initiative amid a wave of criticism from users who found several new features intrusive and unwelcome.
Revisiting User Preferences
Industry experts suggest that this swift rollback is indicative of more profound issues within Kakao’s decision-making framework. Once celebrated for its user-centric approach, the company has faced scrutiny regarding its ability to align with the preferences of its vast user base. In response to the backlash, Kakao announced a return to the previous list-style format for the Friends tab, which serves as the app’s main interface, while relegating the controversial feed-style posts to a separate section.
The feed-style feature had drawn increasing ire from users, who were confronted with a random assortment of friends’ profile pictures and advertisements, echoing the layout of social media platforms. Many users expressed frustration at discovering they were inadvertently following numerous contacts—often acquaintances—without their consent. This shift not only cluttered the user experience but also complicated the fundamental purpose of KakaoTalk as a messaging service.
As users clamored for a way to revert to the previous setup, some even began exploring alternative messaging apps. However, given KakaoTalk’s integral role in South Korea’s digital landscape, the public’s dissatisfaction has only intensified. Following the initial announcement, Kakao’s stock price fell by 4.67 percent, further declining to 59,300 won by the end of the week, resulting in a market cap loss of 1.64 trillion won (approximately .16 billion).
Revenue Challenges and Strategic Goals
Kakao has framed the update as an effort to enhance user experience, yet insiders in the advertising technology sector suggest that the primary aim was to amplify ad revenue by increasing user engagement on the platform. While Kakao has stated it has no immediate plans to implement fees for KakaoTalk, the company is reportedly exploring monetization strategies to invigorate the app’s stagnant revenue growth. After peaking at 537.6 billion won in the fourth quarter of the previous year, KakaoTalk’s business revenue has declined for two consecutive quarters, with ad revenue constituting a significant portion of its earnings.
Analysts have pointed out that the nature of KakaoTalk’s user connections differs from those on platforms like Instagram, where engagement is driven by shared interests. Instead, KakaoTalk users often save contacts out of necessity, raising questions about whether they will interact with the new feed’s content and advertisements in the same way they do on other social media platforms.
Internal Dynamics and User Feedback
Kakao has traditionally employed a feature known as “KakaoTalk Lab” to pilot new functionalities and gather user input before official rollouts. This cautious approach has been deemed essential, given the app’s significant influence on the Korean populace. However, the recent update, dubbed the “Big Bang Project,” was spearheaded by Hong Min-taek, Kakao’s chief product officer, who joined the company earlier this year. This overhaul, touted as the most significant in 15 years, was implemented without the usual user feedback process.
Reports from employees within Kakao suggest that the update was pushed through by upper management, despite dissent from developers and designers. Some employees voiced concerns on an internal community platform, alleging that opposing views were dismissed and labeled as resistance to change. Amid the ongoing backlash, Hong defended the update’s intent to enhance social features while reinforcing messaging capabilities, asserting that key performance metrics have remained stable despite user grievances.
This situation has sparked discussions about whether Kakao has strayed from its foundational philosophy of valuing user feedback and fostering innovation. Observers note that the features introduced in the latest update are not novel and may not resonate with users who are already familiar with similar offerings on competing platforms. The current controversy reflects broader concerns about Kakao’s ability to maintain its pioneering spirit in a rapidly evolving digital landscape.
