How Okay-pop would possibly result in the downfall of Korea’s self-made tech mogul

Kakao Corp. founder Kim Beom-su was arrested Tuesday in Seoul, South Korea. Which may not imply a lot to Westerners, however the story is a weird story of how a celebrated, self-made tech billionaire fell from grace… partly as a result of he purchased a scandal-ridden Okay-pop company.

Kim, who additionally goes by Brian, stands accused of manipulating SM Leisure’s inventory value throughout a high-profile acquisition battle. Kim’s chief rival within the bidding struggle? Hybe, the Okay-pop label that’s finest identified for BTS. Prosecutors indicted Kakao’s chief funding officer, Bae Jae-hyun, final yr on related costs. Kim has denied any wrongdoing.

To again it up a bit, Kakao Corp. is finest identified for KakaoTalk, South Korea’s hottest messaging app, utilized by roughly 47 million of the nation’s 50 million folks. You may describe it as Korea’s WhatsApp, however Kakao isn’t a platform only for messaging. The corporate has dozens of associates that deal with every little thing from purchasing and banking to music and ridehailing. Presently, the corporate’s valued at roughly 17 trillion Korean gained, or $12.4 billion USD.

If Kakao was already so dominant, you would possibly marvel why the corporate would allegedly threat monetary crimes to accumulate a Okay-pop firm. However SM Leisure isn’t just a few label. It’s one of many large three Okay-pop companies chargeable for hit acts like Women’ Technology, Exo, NCT, and Aespa.

Symbolically, Kim’s arrest issues as a result of, amongst Korea’s elite, he’s the uncommon instance of a self-made billionaire. In different phrases, he’s not from a chaebol. In Korea, chaebols are family-run conglomerates like Samsung, Hyundai, SK Group, and LG. These chaebols dominate South Korea’s financial system, usually on the expense of smaller companies. Kim, in contrast, was a basic rags-to-riches story, rising up in poverty to turn into the primary in his household to go to varsity. At his peak, Kim even overtook Samsung inheritor Lee Jae-yong because the richest man in South Korea with a fortune estimated at over $13 billion.

In all seriousness, the aggressive pursuit of a monopoly is what’s actually landed Kakao and Kim in sizzling waters. The corporate has confronted elevated authorities scrutiny after a Kakao knowledge middle hearth in 2022 brought about a five-day nationwide outage, sparking considerations about Korea’s dependence on a handful of tech firms. Since then, Kakao has additionally been the topic of tax evasion investigations. In line with Bloomberg, Kakao has additionally misplaced a 3rd of its worth simply this yr, with Kim dropping roughly $10 billion of his personal fortune.

Although, it in all probability didn’t assist that Kim went somewhat power-hungry throughout one of many worst Okay-pop scandals of the last decade.