{"id":2199221,"date":"2022-10-21T10:11:10","date_gmt":"2022-10-21T10:11:10","guid":{"rendered":"https:\/\/www.nknews.org\/koreapro\/?p=2199221"},"modified":"2023-04-05T16:11:07","modified_gmt":"2023-04-05T07:11:07","slug":"king-kakao-tech-giant-fights-to-keep-its-crown-after-server-outage-scandal","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2022\/10\/king-kakao-tech-giant-fights-to-keep-its-crown-after-server-outage-scandal\/","title":{"rendered":"King Kakao: Tech giant fights to keep its crown after server outage scandal"},"content":{"rendered":"

Recent server outages at major conglomerate Kakao Corp. paralyzed South Koreans’ access to a range of services covering everything from instant messaging and banking to transportation, revealing the risks of relying on a single company for so much.<\/span><\/p>\n

But despite the huge controversy this has caused, the government as well as competitors will likely still struggle to loosen Kakao\u2019s grip on South Korea.<\/span><\/p>\n

On Oct. 15, a fire at the SK C&C data center just south of Seoul took down a number of Kakao\u2019s services for around four days.<\/span><\/p>\n

South Korea relies so heavily on Kakao that President Yoon Suk-yeol <\/span>described<\/span><\/a> it as \u201cno different from the national communication network.\u201d While Kakao is a private company, in some sense Yoon isn\u2019t too far off; indeed, the government used its own text emergency alert service to keep the public updated on the Kakao server outages.<\/span><\/p>\n

Around 43 million of the country\u2019s 51 million people use the <\/span>KakaoTalk<\/span><\/a> messenger app; 12.9 million and 4.6 million use the company\u2019s financial services, <\/span>KakaoBank and Kakao Pay<\/span><\/a>, respectively; and taxi-hailing app <\/span>Kakao T<\/span><\/a> has 30 million users.<\/span><\/p>\n

If you want to know directions, you\u2019re probably going to be using KakaoMap or Naver Map. Google Maps has limited functionality in South Korea due to what the government says are <\/span>national security laws<\/span><\/a> related to data storage.\u00a0<\/span><\/p>\n

KakaoTalk\u2019s login verification is also used for other services, like the country\u2019s largest cryptocurrency exchange, Upbit. The amount of crypto trading activity <\/span>nosedived<\/span><\/a> during the Kakao service outage as a result.\u00a0<\/span><\/p>\n

Kako\u2019s stock prices <\/span>plummeted<\/span><\/a> as a result, and businesses that experienced disruptions are <\/span>seeking compensation<\/span><\/a>. The incident even brought down the company’s co-CEO after only a few months on the job. He will now focus on leading an <\/span>emergency task force<\/span><\/a> to solve technical issues that the server outage brought to light.<\/span><\/p>\n

In short, the whole thing was a disaster. But it could have been worse.<\/span><\/p>\n

If Kakao\u2019s servers went down as a result of, say, a natural disaster or war with North Korea, millions would have faced issues communicating with their families. The government would also have lost a key channel for distributing information.<\/span><\/p>\n

\"\"

Kakao’s server outages were a disaster, but it could have been even worse | Image: Pixabay<\/p><\/div>\n

BLOOD IN THE WATER<\/b><\/p>\n

Some argue<\/span><\/a> that Kakao should have had multiple server data centers spread out from one another so that if one goes down, others can ensure operations continue to run smoothly. Kakao Vice President Yang Hyun-seo appeared to claim that geographic proliferation <\/span>may not have made much difference<\/span><\/a>, but it\u2019s difficult to square this against the data management practices of other tech giants.<\/span><\/p>\n

For example, Google and Meta operate backup servers across <\/span>different continents<\/span><\/a> to prepare for precisely the kind of trouble that Kakao found itself in over the weekend. Naver, which runs South Korea\u2019s largest internet search portal, was also affected by the fire in Pangyo city over the weekend but was able to recover in only a few hours because it could fall back on its <\/span>own data center<\/span><\/a> in Chuncheon.<\/span><\/p>\n

Kakao\u2019s competitors took full advantage of the chaos. Naver <\/span>promoted<\/span><\/a> its own messaging app, Line, with the caption \u201cwhen you need to make an urgent contact.\u201d Telegram wryly <\/span>tweeted<\/span><\/a> that it hopes its new South Korean users \u201cwill enjoy the stability of Telegram\u2019s multiple data center infrastructure.\u201d<\/span><\/p>\n

Kakao lost around 2 million users in the aftermath of the Pangyo fire, and it seems that they went to Facebook Messenger, Line and Telegram, judging by <\/span>statistics<\/span><\/a> from one industry tracker.<\/span><\/p>\n

According to WiseApp, between Oct. 14 ( just before the fire) and Oct. 16 (just after) Line user numbers for those above 10 years old in Korea tripled from 430,000 to 1.28 million, Facebook Messenger from 1.22 million to 1.41 million and Telegram from 1.06 million to 1.28 million.<\/span><\/p>\n

It\u2019s not clear how many users jumped ship temporarily and are now back to using Kakao. But even if the exodus were permanent, Kakao still has around a whopping 40 million users, roughly 10 times as many as Line, Facebook Messenger and Telegram combined.<\/span><\/p>\n

KAKAO KINGDOM<\/b><\/p>\n

Nevertheless, the Pangyo fire has prompted South Koreans to reflect on Kakao\u2019s influence, and changes could be on the way to curb its dominance.<\/span><\/p>\n

According to President Yoon, the Fair Trade Commission is <\/span>examining<\/span><\/a> what measures the government should take if Kakao has monopolized the market. Voices from across the <\/span>political<\/span><\/a> spectrum<\/span><\/a> have also called out Kakao for unfair monopolistic practices.<\/span><\/p>\n

The Free Trade Commission does have <\/span>plans<\/span><\/a> to limit major platforms\u2019 ability to seek merger and acquisition projects from early next year. As of May 2022, Kakao had 136 affiliates.<\/span><\/p>\n

But South Korea\u2019s economy is defined by big players, suggesting Kakao may ultimately get off relatively lightly. The large \u201c<\/span>chaebol<\/span><\/a>\u201d conglomerates dominate all sectors of the economy and there seems little initiative to rein in, say, Samsung or Hyundai.<\/span><\/p>\n

Given how the Pangyo fire has sparked discussion on the effect companies like Kakao can have on national security, South Korean lawmakers may also push to <\/span>designate<\/span><\/a> data centers as state disaster management facilities.<\/span><\/p>\n

Such measures were contemplated following a fire at KT\u2019s communications facility in Seoul <\/span>in 2018<\/span><\/a>. But the judiciary and legislation committee <\/span>rejected<\/span><\/a> the bill in 2020 amid concerns of over-regulation.<\/span><\/p>\n

Kakao has certainly taken a hit and faces a difficult few months ahead. But with Koreans still largely sticking to using its wide array of services, it seems it will take more than these server outages for competitors to topple the company.<\/span><\/p>\n

Edited by Arius Derr<\/span><\/i><\/p>\n

Business & Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"

Recent server outages at major conglomerate Kakao Corp. paralyzed South Koreans’ access to a range of services covering everything from instant messaging and banking to transportation, revealing the risks of relying on a single company for so much. But despite the huge controversy this has caused, the government as well as competitors will likely still […]<\/p>\n","protected":false},"author":5769,"featured_media":2199222,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[21],"tags":[24],"class_list":["post-2199221","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","tag-business-economy"],"yoast_head":"\nKing Kakao: Tech giant fights to keep its crown after server outage scandal - KOREA PRO<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2022\/10\/king-kakao-tech-giant-fights-to-keep-its-crown-after-server-outage-scandal\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"King Kakao: Tech giant fights to keep its crown after server outage scandal - KOREA PRO\" \/>\n<meta property=\"og:description\" content=\"Recent server outages at major conglomerate Kakao Corp. paralyzed South Koreans’ access to a range of services covering everything from instant messaging and banking to transportation, revealing the risks of relying on a single company for so much. 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