Kakao to provide news services late this year

Kakao Corp., South Korea's biggest mobile messenger service provider, said Thursday it plans to start its news services late this year in the country, issuing a challenge to Naver Corp., which dominates online media contents.

To that end, Kakao has been expanding ties with news providers to distribute their contents through its new platform, and will kick off a test-run version of the application next week, the company said. It aims to start a full-fledged service by the end of the year.

"The app will be available for testing to all users next week, if not by the end of September," a communications official from Kakao said. "It aims to become a platform for not only news services, but other comprehensive contents as well."

The company said the "contents" will include other stories from social networking services and magazines. It declined to give more details, including the number of news agencies that joined hands with Kakao.

The app is said to automatically select articles depending on the users' interests and allow them to share such contents with other friends.

It is expected to rise as a challenge for No. 1 local portal operator Naver, which already has been fighting with Kakao on the local messenger market.

Naver, which operates the most-visited portal in South Korea, took up 76.69 percent of South Korea's search-engine market in July, while Kakao's soon-to-be-merged brother, Daum Communications Corp., held a share of 19.89 percent, data by Nielsen KoreanClick Co. showed.

With U.S. giant Google Inc. holding only a 2.06 percent share here, Naver and Daum are referred to as the two major distribution platforms for local news agencies and have been increasing their dependence on the online market as traditional print media loses ground.

As Kakao commands around 35 million users in South Korea, a country with a population of around 50 million, industry watchers anticipate the messenger service provider will emerge as another battleground and spark a reshuffle in the local news market.

Last month, shareholders of Daum Communications and Kakao approved the merger of the two firms that will create the biggest company on South Korea's secondary bourse. The entity, dubbed Daum-Kakao, will officially open its doors on Oct. 1.

The approval came three months after the two announced a merger through a stock swap arrangement. The stock swap ratio has been set at one Kakao share for 1.556 shares of Daum.

Kakao, which traditionally has depended only on its messenger service for its income, has recently been making strides to find new sources of income to sustain its growth, such as its launch of "Kakao Pay," a simplified mobile payment system, earlier this month. (Yonhap)