South Korea’s Kakao plunges after outage, calls for monopoly probe

KakaoTalk and other services of Kakao Corp. was facing severe power outages after a fire broke out at a data center on the outskirts of the country’s capital Seoul (Pictured by Thiago Prudencio / SOPA Images / LightRocket via Getty Images)

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Shares of South Korea’s top messaging app fell on Monday after a major data center outage over the weekend disrupted services for more than 53 million users worldwide.

Incident has been caused by a fire at the data center, which also hosts servers for other major Korean tech companies. KakaoTalk is not only Korea’s leading messaging app, it is heavily reliant on everything from online payments, games and ride-hailing as well as login verification to other major websites.

Kakao reported 47.5 million monthly active users in South Korea in the second quarter. That’s more than 90% of South Korea’s population of 51.74 million people, as of November 1, 2021.

South Korean President Yoon Suk-yeol described the impact of Kakao’s shutdown as “no different from a national communication network.” He called on the relevant ministries to investigate the exact cause and extent of the disruption and make plans to prevent similar incidents.

“If there is a monopoly or monopoly manipulating the market, we need to take systemic measures from the national level for the benefit of the people,” Yoon said on Monday.

On Monday, shares of Kakao Corp. fell more than 9% at the open, while internet giant Naver fell 2% in morning trading before incurring losses. Naver also briefly faced limited disruption as the data center also hosts servers for the company, but resumed most operations on Sunday.

Korea's Kakao and Naver shares fall after fire disrupts services

The operator of the data center, SK Inc, also fell more than 4% at opening. Kakao subsidiaries Kakao Pay, Kakao Bank and Kakao Games all fell more than 7% in this morning’s trading in Korea.

Kakao initially announced the service disruption on Saturday afternoon, which lasted until Sunday morning.

“We bow our heads and sincerely apologize to all users who are facing Kakao service disruptions at the moment,” the company said. The co-CEOs said in a statement last weekend.

“We promise to take utmost measures to prevent problems like this from recurring and to investigate the cause of this incident,” they said, adding that the company was working to back it up. data for other facilities in the country as soon as the fire broke out.

“This is a rare case of a data center being completely impacted, so the rollout of these data centers took longer than expected. [back up] they say.

In a tweet Monday morning, Kakao said some services were back up and running, but users continued to report problems.


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