South Korea’s Naver to target foreign governments with latest ChatGPT-like AI model

Naver, South Korea’s dominant internet search engine, is set to offer tailored versions of its latest ChatGPT-like artificial intelligence model to foreign governments concerned about US data controls.

Unlike Microsoft and Google’s focus on universal AI models, Naver is keen to develop localised AI applications for countries with political sensitivities in the Arab world, as well as for non-English speaking countries such as Spain and Mexico, where governments are keen to have their own AI systems customised to their political and cultural contexts.

“This will be a massive business as sovereign AI technology is becoming increasingly important for data protection,” said Sung Nako, a Naver executive in charge of developing hyperscale AI, which involves the organising of computing power and data in the cloud on a massive scale to train and operate AI.

In an FT interview, he compared exporting Naver’s AI models to building atomic power plants abroad and helping those countries run them, claiming that the company could export at much lower prices than western rivals such as Amazon. Naver recently signed a preliminary agreement with Saudi Arabia to provide IT services including AI tools to help the country’s transition to the digital economy.

“It is becoming like a new cold war as the US government now has the authority to look into data and information stored in American companies’ cloud systems,” Sung said, pointing to several countries’ reluctance to use US cloud and AI systems due to security concerns.

However, experts cautioned Naver may be over-optimistic about overseas sales of its AI systems, given previous failures in taking its search engine abroad, despite its dominance in the Korean market.

“Naver’s AI algorithms are not standardised and are too much customised for Korean services, unlike Google’s, for example,” said Wi Jong-hyun, a business professor at Chung-Ang University in Seoul. “Applying its systems for other countries is not easy and customising them for each different country requires huge financial and human resources, which I don’t think Naver is ready for yet.”

Naver says it will still prioritise its home market with HyperClova X, its upgrade to its existing ChatGPT-like AI due to launch this summer. It will be used to improve its own search and shopping services, while providing customised versions for business.

“We are about eight months behind OpenAI’s ChatGPT in terms of technology, but we are much better than ChatGPT in terms of Korean services,” said Sung.

“We are clearly focusing on Korea and Japan for now, but we are also eyeing more overseas markets as localisation will be the key in the AI race,” he added.

South Korea is one of the few countries where Google’s search engine has failed to dominate. Naver has a 61 per cent market share compared with Google’s 29 per cent, according to Statista.

However, the company is now likely to face stiffer competition in Korean-language AI services, with Google choosing Korean and Japanese as the first foreign language services for its AI-based chatbot Bard.

“Now, we are facing a bigger threat in our main market, with Google’s Bard,” admitted Sung.

The Korean company has other lucrative business units, such as its LINE messaging and services app, and it runs popular entertainment platforms for webtoons and K-pop fandom.

It has been at the forefront of South Korea’s efforts to develop an AI ecosystem, with the HyperClova AI model, developed in 2021, being used for its various services since last year.

Naver has also collaborated with Samsung Electronics to develop chips optimised for AI, with the Korean government keen to develop the technology as the country’s next growth engine on the back of its semiconductor strength and well-developed IT infrastructure.