How K-pop might lead to the downfall of Korea’s richest self-made tech mogul

Kakao Corp. laminitis Kim Beom-su was arrested Tuesday successful Seoul, South Korea. That mightiness not mean overmuch to westerners, but the communicative is simply a bizarre communicative of however a celebrated, self-made tech billionaire fell from grace... partially due to the fact that helium bought a scandal-ridden K-pop agency.

Kim, who besides goes by Brian, stands accused of manipulating SM Entertainment’s banal terms during a high-profile acquisition battle. Kim’s main rival successful the bidding war? HYBE, the K-pop statement that is champion known for BTS. Prosecutors indicted Kakao’s main concern serviceman Bae Jae-hyun past twelvemonth connected akin charges. Kim has denied immoderate wrongdoing.

To backmost it up a bit, Kakao Corp is champion known for KakaoTalk, South Korea’s astir fashionable messaging app, utilized by astir 47 cardinal of the country’s 50 cardinal people. You could picture it arsenic Korea’s WhatsApp, but Kakao isn’t a level conscionable for messaging. The institution has dozens of affiliates that grip everything from buying and banking to euphony and ride-hailing. Currently, the company’s valued astatine astir 17 trillion Korean won, oregon $12.4 cardinal USD.

If Kakao was already truthful dominant, you mightiness wonderment wherefore the institution would allegedly hazard fiscal crimes to get a K-pop company. But SM Entertainment isn’t conscionable immoderate label. It’s 1 of the large 3 K-pop agencies liable for deed acts similar Girls Generation, EXO, NCT, and Aespa.

Acquiring SM was meant to assistance expand its planetary reach, due to the fact that portion Kakao is ascendant successful Korea, it’s not precise good known extracurricular of it. K-pop, however, is massively fashionable successful Asia and increasingly, the west. Except Kakao’s bidding warfare with HYBE was truly the last section successful a bigger, sprawling K-pop takeover scandal involving alleged taxation evasion and embezzlement, arsenic good arsenic the downfall of the alleged “godfather of K-pop”. Kakao yet “won” by throwing $963 cardinal astatine SM to unafraid a bulk stake.

Symbolically, Kim’s apprehension matters due to the fact that among Korea’s elite, helium is the uncommon illustration of a self-made billionaire. In different words, he’s not from a chaebol. In Korea, chaebols are family-run conglomerates similar Samsung, Hyundai, SK Group and LG. These chaebols dominate South Korea’s economy, often astatine the disbursal of smaller businesses. Kim, by contrast, was a classical rags-to-riches story, increasing up successful poorness to go the archetypal successful his household to spell to college. At his peak, Kim adjacent overtook Samsung heir Lee Jae-yong arsenic the richest antheral successful South Korea with a luck estimated astatine implicit $13 billion.

In each seriousness, the assertive pursuit of a monopoly is what’s truly landed Kakao and Kim successful blistery waters. The institution has faced accrued authorities scrutiny aft a Kakao information halfway occurrence successful 2022 caused a five-day nationwide outage, sparking concerns astir Korea’s dependence connected a fistful of tech companies. Since then, Kakao has besides been the taxable of tax evasion investigations. According to Bloomberg, Kakao has besides mislaid a 3rd of its worth conscionable this twelvemonth with Kim losing astir $10 cardinal of his ain fortune.

Though, it astir apt didn’t assistance that Kim went a small power-hungry during 1 of the worst K-pop scandals of the decade.