Although A.I. chatbots such as ChatGPT could be a threat to the search ad market, South Korean internet company Naver views the rise of A.I. as a potential advantage for the firm. Naver is the most widely used search engine in South Korea, with 61.2% of monthly active users, according to Statista. Google has a market share of 28.55% in the country, despite its widespread presence.
Search engines face a threat from A.I.-driven chatbots like ChatGPT, which can give direct answers to user queries instead of showing a list of webpages that the user must sift through to find an answer.
This could result in a faster search experience for the user, provided that all the information presented by the chatbot is accurate.
If fewer individuals use search engines as a result of chatbots' ability to provide direct answers, it could lead to a reduction in search ad income, which is frequently the largest source of income for search engine operators. In 2022, Alphabet made more than 57% of its revenue, or $162 billion, from Google searches.
Although Naver, like Google, is primarily a search engine operator, it has diversified into other business sectors, including the content platform Naver Webtoon and multimedia mobile app Snow, fintech division Naver Pay, and an e-commerce platform called Naver Shopping.
Naver CFO Kim Nam-Sun says AI will be a “huge opportunity” for each of its businesses, “whether it’s enhanced search [results], whether it’s [an] enhanced shopping experience, whether it’s fintech or even when it comes to Webtoon recommendations, or even Webtoon illustration tools.”
Kim, the CEO of Naver, states that integrating AI into Naver's services would improve the user experience by offering better search, shopping, and travel recommendations. According to him, Naver is already the most popular website for searching travel itineraries.
He believes that AI will only strengthen Naver’s offerings, pointing out that “AI is something that’s not foreign to us, but it’s very important to each of our businesses.”
“So, to the extent that AI can actually better that experience, I think it’s a game changer for the user.”
Naver announced the launch of HyperCLOVA X, its hyperscale AI product that will provide generative AI-driven search for users and customized services for enterprises. The product is set to be launched this summer. Naver's Q1 earnings report showed a 23.6% YoY increase in sales to 2.28 trillion won, but a 71.2% decline in net profit to 43.7 billion won compared to the same period last year. Operating profit increased by 9.5% YoY to 330.5 billion won.
Following the announcement of the earnings results, Naver's shares gained 5.56% on Monday and an additional 1.93% on Tuesday.
