Kakao workers launch company's first-ever strike over bonus dispute

Kakao has entered its first strike since the company was founded, after last-minute negotiations broke down over the size of performance bonuses and whether restricted stock units should count as part of that compensation. An immediate disruption to KakaoTalk and other major services is considered unlikely, but the share price recently hit a 52-week low. Shareholder anxiety is growing as labor strife compounds concerns about the slow pace of visible returns from AI investment, even as earnings have reached record highs.

The Kakao chapter of the Korea Federation of Chemical, Textile, Food and Allied Industries Trade Unions began a partial strike Wednesday morning and held a rally at Pangyo Station plaza in Bundang-gu, Seongnam, Gyeonggi Province.

The walkout spans four hours of working time excluding the lunch break, marking the first strike in Kakao's history. Workers from Kakao's headquarters and affiliates whose wage negotiations also collapsed — including Kakao Pay, Kakao Enterprise, DK TechIn and XL Games — joined the action.

"We held additional talks ahead of the strike but ultimately could not reach an agreement," a Kakao official said.

The central sticking point is compensation. The union is demanding that a fixed percentage of operating profit be set aside as a bonus pool, citing last year's earnings. Management has reportedly pushed back, arguing the union's proposal would place an undue burden on the company.

The two sides are also divided over whether RSUs should count toward performance bonuses. Kakao has been issuing RSUs to employees who stay for a set period, replacing the stock options it previously offered. Management considers RSUs part of performance compensation, while the union argues they should be treated as a separate benefit and that cash bonuses must be paid on top.

The union said it does not plan to immediately escalate to a full strike. It will assess the situation after the four-hour partial walkout and adjust the intensity of its action depending on how future negotiations unfold.

Ahead of the strike, the Ministry of Science and ICT and Kakao reviewed service stability. The nature of a platform company makes an immediate service outage unlikely, but the review reflects concern over the wide reach of services such as KakaoTalk and Kakao Pay in daily life. An emergency cooperation framework is in place to enable a rapid response should an unexpected outage or security incident occur. Kakao said it would focus on maintaining stable service operations to avoid inconvenience to users.

Markets have reacted coolly to the labor unrest. Kakao's share price recently set a new 52-week low, falling as far as 37,600 won (about $25) during trading on June 8. The stock, which once traded above 170,000 won, has been pushed down to the 30,000-won range and has shed more than 40 percent this year alone.

Kakao's financial performance alone does not tell a story of decline. The company posted its highest-ever annual operating profit last year on a consolidated basis, and its first-quarter results this year also reached a record high for any single quarter. Kakao has also laid out plans to transform KakaoTalk into an agentic AI platform capable of recommending products, handling reservations and processing payments based on conversational context. It has unveiled services including "Kanana in KakaoTalk," "Kanana Search" and "ChatGPT for Kakao," developed in partnership with OpenAI. Yet with no clear improvement in results from AI adoption yet visible, the widening rift between management and labor has sent the share price moving in the opposite direction from earnings.

A prolonged labor dispute could deepen the pressure. Internal instability risks spilling over into the KakaoTalk overhaul, the development of AI services and the recovery of the advertising and commerce businesses. The mood inside the company has already darkened: the chief product officer stepped down following controversy over the KakaoTalk redesign, and the company's first-ever strike has now become a reality.