Fire at Data Center Reveals S. Korea’s Strong Dependence on Kakao Services

SEOUL, Oct. 19 (Korea Bizwire) — The recent massive disruption of Kakao Corp.’s dominant chat messenger KakaoTalk and other related services has affected nearly all sectors of South Korea, ranging from social networking and business to finance and transportation.

It took about four days for the company to fully repair damaged servers and normalize all of its services after a fire broke out Saturday at its data center in SK C&C, located in Pangyo, just south of Seoul.

Over the period, people complained of inconveniences in their daily lives and businesses as KakaoTalk chat rooms are widely used as a tool to receive exclusive messages, coupons and other real-time information.

Launched in 2010, KakaoTalk became the most popular mobile messenger in the country of 51 million people, with 43 million monthly active users

It is not simply an online chatting app but also a platform to help users buy real-life goods, play games, and access banking, online payments and ride-hailing services run through Kakao’s affiliates like Kakao Pay and Kakao T.

Its log-in verification function is widely used by other major websites.

Even public services like the state-run COVID-19 vaccination reservation program are tied to the app.

The service failure also troubled mom-and-pop store owners and small online shopping mall operators, who suffered errors in customer management, online booking and payments, while taxi drivers failed to receive calls from Kakao T users.

Consequently, public calls soared for government intervention to tackle Kakao’s dominance in the communications market, claiming that the dayslong service stoppage exposed a major vulnerability in the country, one of the world’s most wired nations.

Earlier this week, President Yoon Suk-yeol said the Kakao service is regarded as the country’s “basic infrastructure,” calling on relevant ministries to map out plans to prevent similar incidents.

“I’m a believer in a free market economy that respects the freedom and creativity of businesses, but that is premised on the market rationally distributing resources and income according to a fair and competitive system,” Yoon told reporters Monday.

“If the market is distorted by a monopoly or serious oligopoly, and if that forms something as big as a country’s basic infrastructure, I think the state should certainly take the necessary institutional steps in the interest of the people,” he said, adding the Fair Trade Commission (FTC) is looking into the matter.

The presidential office later said it will launch a national task force to discuss the messenger service’s outage and the meeting will include military officials and the national intelligence agency.

At the same time, the FTC is rolling up its sleeves to keep close tabs on dominant platform operators like Kakao, who have been accused of abusing their controlling market status and engaging in unfair business practices against contractors.

According to the FTC, Kakao was the 15th-biggest business group in South Korea as of May, with 136 firms under its wing, including KakaoBank Corp. and Kakao Games Corp.

“We are speeding up the process to set up guidelines against unfair business activities and abuse of market dominance,” an FTC official said.

Civic groups blamed the government for helping Kakao expand its business to various sectors in recent years and called for antitrust regulations targeting Kakao.

“The government is responsible for the latest incident as it has gone along with the private communications firm’s reckless service expansion,” said the Seoul-based People’s Solidarity for Participatory Democracy.

“The government must seek ways to regulate unfair monopolies in the market and place responsibility on platform operators.”

(Yonhap)