Kakao outage in South Korea prompts security, monopoly concerns

SEOUL – In Korea, Kakao is very popular. Nearly everyone, from students to the elderly, uses the Korean tech company’s apps for messaging, taxis, navigation and payments. It’s Facebook Messenger, WhatsApp, Uber, Google Maps and Venmo combined into one.

So when a fire at the building where the company’s servers operate this weekend, disabling its apps, people joked that the country was going to shut down.

But the outage has forced serious consideration of security concerns and monopolies in South Korea, where several giant corporations dominate the country’s economy. (Hyundai, best known for its cars in the United States, operates apartment complexes and department stores here; Samsung, the tech giant, also sells insurance and owns a high-end clothing company.)

Kakao said in a presentation to investors in August that its customer base has grown to 53.3 million active users, with 47.5 million of them in South Korea – predominate. dominant position in a country of more than 51 million people. Many shops accept Kakao Pay, most taxis across the Seoul metropolitan area run on Kakao T, the company’s ride-hailing app, and friends, companies and even the government use Kakao Talk to exchange message.

It’s not uncommon for websites and apps to crash – Amazon Web Services, Slack, Facebook, WhatsApp and Apple They all cause a stir and panic for consumers – but they usually last hours, not days, and they don’t usually affect too many parts of people’s lives.

On Monday, as Kakao was still bringing some of its services back online, Chairman Yoon Suk-yeol said his administration would investigate whether Kakao had a monopoly on the market. If that’s the case, Kakao will become “national infrastructure”, Yoon speak“Then the state must take the necessary measures in the interest of the people.”

On Sunday, Yoon’s spokesman, Kim Eun-hye, said the disruption “not only damages people’s livelihoods, but also causes serious problems for national security in the event of an emergency.” grant”. Resilience in the face of such incidents, Kim speak“Is a corporate responsibility and a social promise.”

Kakao stock fell 9.5% Monday morning before closing nearly 6% lower than it closed Friday.

“Risk management in Korea is not a strong measure for most companies,” said JR Reagan, an American cybersecurity consultant in Korea who runs the consulting firm IdeaXplorer Global. “They don’t like to plan for things that haven’t happened yet.”

Kakao’s first problem, he said, was that it didn’t seem to have a backup generator to make up for the outage. Second, “you don’t put all your servers in one location – you spread them out,” so that an incident – ​​like a fire – doesn’t cause widespread outages and slow recovery like so, he said. He said US tech companies have “learned their lesson” there.

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Kakao and SK Telecom, another consortium that operates Kakao’s servers, did not respond to a request for comment Monday. Kakao said in a statement Sunday that it established an emergency response committee to deal with the incident. Some features such as messaging and Kakao T were restored on Sunday night, the statement said.

Hong Eun-taek, co-CEO of Kakao, said in the statement, “We sincerely apologize for the inconvenience caused by this accident, and we are currently doing our best to normalize the epidemic. service.” He added that the company is working to prevent similar incidents from happening again and that they are preparing a “compensation policy” for those affected.

Tammy Lee, a student at Korea University, turned 21 on Sunday. “When the power outage happened the day before, I started to get really worried,” Lee said. In Korea, young people often use Kakao to send birthday gifts; The recipient receives a message and can choose the color or size of the item and confirm the shipping address.

“When I realized I wouldn’t be able to receive any presents this year, I was really sad,” Lee told The Washington Post on Monday (in a Kakao message). By the time gifting resumed on Sunday night, “only a handful of people” who had texted her happy birthday had re-registered to send gifts, she said.

“I think the past few days show why Kakao dominance can be a threat, but honestly, I don’t think any other ‘competitor’ will replace Kakao in the coming days. this moment because it is so ingrained in our lives,” she said. “I can’t imagine people giving up one lifestyle just to switch to another app.”

That doesn’t stop competitors from trying to take advantage of the moment. Line, a messaging app operated by South Korean internet giant Naver – the Korean version of Google – promote its reliability. Line, Uber and messaging app Telegram have risen to the top of the App Store charts in South Korea. Telegram mocks Kakao on TwitterWe welcome our new Korean users and hope they will enjoy the stability of Telegram’s multi-data center infrastructure.

Hwang Lee, director of the Center for Innovation, Competition and Regulation Law at Korea University, said Kakao could be called a monopoly “in a simple sense”, but said he did not want to go so far as to declare a monopoly. Claiming it to be a monopoly involves antitrust enforcement.

Korea’s Fair Trade Commission “has been closely monitoring Kakao and other proprietary digital platforms for a long time,” Lee said. But “their efficient services so far are subject to government regulations” as the government weighs the pros and cons of a well-integrated platform, he said.

Still, the power outage is a wake-up call for South Koreans, Lee said. “They recognize the potential dangers of platform monopolies, which have been overlooked.”


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