They were ordered to pay the company.
It was belatedly revealed that SM Entertainment‘s subsidiary, DearU, was taken to court and sentenced to pay damages after unilaterally terminating a contract without paying a cooperating company.
DearU operates the app Bubble, where about 600 idols from 157 agencies communicate directly with fans. The app has about 2 million paid subscribers worldwide. While preparing to launch a new service called MyHome—which includes 3D avatars and personal spaces—DearU outsourced its development to a software company called SilosLab but later demanded contract termination, reportedly saying the avatars were “not cute,” leading to legal disputes.
According to industry sources on June 13, 2025, the Seoul Central District Court’s Civil Division 30 partially ruled in favor of the plaintiff, SilosLab, in the damages lawsuit it filed against DearU this past February.
“DearU unilaterally notified contract termination without just cause and is therefore liable to pay damages. DearU must pay SilosLab ₩285 million KRW (about $209,000 USD) for development costs including labor expenses.”
MyHome is a metaverse-based service that allows fans to interact with star avatars. During its IPO at the end of 2021, DearU presented MyHome as a major future revenue stream.”
According to the contract signed in early 2022, DearU was responsible for the overall content planning of MyHome, while SilosLab was to develop the paid and free services based on that plan. Sales profits were to be split—30% for DearU and 70% for SilosLab. An industry insider remarked,
“There was internal controversy at DearU from the beginning about the partner taking 70% of the revenue.”
Collaboration between the two companies stopped in November of that year. DearU claimed the termination was due to SilosLab missing agreed development deadlines and delivering substandard work that was ‘commercially unusable.‘”
They noted that complaints like “not cute” or “does not meet user expectations” were too subjective. The court claimed it was difficult to conclude that the final product was of such poor quality that the contract couldn’t continue. The court also pointed out that DearU failed to properly pay for development costs. SilosLab initially billed ₩126 million KRW (about $92,700 USD) for extra work. DearU objected, calling it excessive. SilosLab reduced the bill to ₩70.0 million KRW (about $51,500 USD) but was ultimately not paid.
