Life in South Korea changed over the weekend.
Millions of people have had difficulty communicating with each other. Many people cannot pay for everyday items at convenience stores or order food and groceries. Travelers have been stranded because they can’t book taxis, depriving drivers of income.
The chaos had one source: the Kakao suite of applications was down due to a fire at a data center. Started as a messaging app more than a decade ago, KakaoTalk has become a universe of its own, with services including banking and payments, ride-hailing, maps and games. It is found on more than 90% of phones in Korea.
The multi-day outage and the devastation it caused have stirred national reckoning about the country’s growing reliance on Big Tech. The company and a government minister apologized. Describing KakaoTalk as a “national infrastructure,” President Yoon Suk-yeol of South Korea ordered an investigation into the incident, raising concerns about monopoly status.
On Wednesday, four days after a fire at a data center in Pangyo, near Seoul, a senior Kakao executive took responsibility for the outage and resigned. By then most Kakao services have been restored.
However, questions remain as to why the company seems to lack a backup plan to restore services faster. The fire also affected Naver, another internet conglomerate in South Korea, but that company recovered much faster than Kakao.
Namkoong Whon, co-CEO of Kakao, is ultimately the person in charge of data operations. He said he “felt great responsibility” for the blackout and said the company would assist with a government investigation into the fire.
Hong Eun-taek, Kakao’s other co-director, will now take the sole helm of the company. Joining Mr. Namkoong at the press conference, he said Kakao plans to compensate businesses affected by the outage and make sure to prevent another outage.
Namkoong, 50, said: “We have caused a great inconvenience to everyone.
Multiple customer groups are preparing a class-action lawsuit against Kakao, according to a Korean newspaper. Lawyers have argued that the accident was the result of “negligence” and inadequate preparation. Kakao’s share price fell sharply in Seoul on Monday, its first day of trading after the shutdown, but largely offset Wednesday’s loss.
Kakao and Naver often compare with China’s WeChat, a so-called superapp, a mixture of messaging, payment, delivery and more services. In South Korea, the rapid growth of internet giants has come face-to-face with the country’s chaebols, the family-run conglomerates that have long dominated the country’s economy.
