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SEOUL, May 7 (Yonhap) -- South Korea's artificial intelligence (AI) startup Upstage said Thursday it has formally signed a contract with internet giant Kakao Corp. to acquire the country's No. 2 search engine, Daum.
Under the deal, Upstage will acquire Kakao's entire stake in AXZ Corp., the operator of Daum, while Kakao will obtain a new stake in Upstage. The companies did not disclose the financial terms of the agreement.
AXZ is a wholly owned subsidiary of Kakao that was spun off in May last year as part of the company's broader plan to revive Daum's competitiveness amid its declining market share.
The acquisition deal was finalized four months after Upstage and Kakao signed a memorandum of understanding on a stake swap arrangement.
Upstage said it plans to integrate its large language model, Solar, with Daum's search engine and content data to transform the platform into an AI-powered portal service.
The startup also said the acquisition is expected to create synergies with its bid in a government-led competition to develop a homegrown AI foundation model.
Upstage passed the first round of the contest in January along with SK Telecom Co. and LG AI Research, with a second round scheduled in August.
This image provided by Upstage on May 7, 2026, illustrates the artificial intelligence startup's acquisition of portal service Daum. (PHOTO NOT FOR SALE) (Yonhap)
ejkim@yna.co.kr
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