Kim Beom-soo, founder of Kakao Corporation He was arrested on Tuesday. Seoul, South Korea. It may not mean much to Westerners, but it’s a bizarre tale of how a famously self-made tech billionaire fell from grace in part for buying a scandal-ridden K-pop agency.
Kim, also known as Brian, is accused of manipulating SM Entertainment’s stock price in a high-profile bidding war. Kim’s biggest rival in the bidding war is Hybe, the K-pop label best known for BTS. Prosecutors Kakao’s Chief Investment Officer Bae Jae-hyun indictedKim was arrested on similar charges last year. He denies any wrongdoing.
As a bit of background, Kakao is best known for KakaoTalk, South Korea’s most popular messaging app, used by around 100,000 people. 47 million out of a national population of 50 millionKakao may be considered the Korean version of WhatsApp, but it’s much more than just a messaging platform. The company has dozens of subsidiaries that handle everything from shopping and banking to music and ride-hailing. Its market capitalization is currently around 17 trillion Korean won, or $12.4 billion.
You might wonder why Kakao would risk financial crime by acquiring a K-pop company if it was already so dominant, but SM Entertainment is more than just a label: it’s one of the big three K-pop agencies, with hit artists like Girls’ Generation, EXO, NCT, and Aespa.
Symbolically, Kim’s arrest is significant because he is one of the few self-made billionaires among South Korea’s elite. In other words, he is not from a chaebol. In South Korea, chaebols are family-run conglomerates like Samsung, Hyundai, SK Group and LG. These conglomerates are Controlling the Korean economyKim, by contrast, is the classic rags-to-riches figure, having grown up in poverty and been the first in his family to go to college, and at his peak, surpassing Samsung heir Lee Jae-yong to become South Korea’s richest man. Estimated fortune of over $13 billion.
In all seriousness, it’s Kakao and Kim’s aggressive pursuit of a monopoly that has landed them in hot water: the company faced increased government scrutiny after a fire at a Kakao data center in 2022. Five-day nationwide blackoutThat sparked concerns about South Korea’s reliance on a small number of technology companies. Kakao has since Tax evasion investigation. according to BloombergCocoa has also lost a third of its value this year alone, and Kim’s own net worth has dropped by about $10 billion.
But it probably didn’t help that Kim’s hunger for power has only intensified a bit in the wake of one of the worst K-pop scandals of the decade.
