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 nan communicative is simply a bizarre communicative of really a celebrated, self-made tech billionaire fell from grace... partially because he bought a scandal-ridden K-pop agency.

Kim, who besides goes by Brian, stands accused of manipulating SM Entertainment’s banal value during a high-profile acquisition battle. Kim’s main rival successful nan bidding war? Hybe, nan K-pop explanation that is champion known for BTS. Prosecutors indicted Kakao’s main finance officer, 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 celebrated messaging app, utilized by astir 47 cardinal of nan 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 shopping and banking to euphony and ridehailing. Currently, nan company’s weighted astatine astir 17 trillion Korean won, aliases $12.4 cardinal USD.

If Kakao was already truthful dominant, you mightiness wonderment why nan institution would allegedly consequence financial crimes to get a K-pop company. But SM Entertainment isn’t conscionable immoderate label. It’s 1 of nan large 3 K-pop agencies responsible for deed acts for illustration Girls’ Generation, Exo, NCT, and Aespa.

Acquiring SM was meant to thief expand its world reach because, while Kakao is ascendant successful Korea, it’s not very good known extracurricular of it. K-pop, however, is massively celebrated successful Asia and, increasingly, nan West. Except, Kakao’s bidding warfare pinch Hybe was really nan last section successful a bigger, sprawling K-pop takeover scandal involving alleged taxation evasion and embezzlement, arsenic good arsenic nan downfall of nan alleged “godfather of K-pop.” Kakao yet “won” by throwing $963 cardinal astatine SM to unafraid a mostly stake.

Symbolically, Kim’s apprehension matters because, among Korea’s elite, he is nan uncommon illustration of a self-made billionaire. In different words, he’s not from a chaebol. In Korea, chaebols are family-run conglomerates for illustration Samsung, Hyundai, SK Group, and LG. These chaebols dominate South Korea’s economy, often astatine nan disbursal of smaller businesses. Kim, by contrast, was a classical rags-to-riches story, increasing up successful poorness to go nan first successful his family to spell to college. At his peak, Kim moreover overtook Samsung heir Lee Jae-yong arsenic nan richest man successful South Korea pinch a luck estimated astatine complete $13 billion.

In each seriousness, nan fierce pursuit of a monopoly is what’s really landed Kakao and Kim successful basking 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 nan taxable of tax evasion investigations. According to Bloomberg, Kakao has besides mislaid a 3rd of its worth conscionable this year, pinch Kim losing astir $10 cardinal of his ain fortune.

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