South Korean Super App Kakao Goes Down, Putting a Halt on Life

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Life in South Korea went askew this past weekend.

Millions of people had trouble getting in touch with one another. Many could not pay for everyday items at convenience stores or order food and groceries. Travelers were left stranded because they were not able to book taxis, depriving drivers of income.

The chaos had one source: the Kakao suite of apps was down because of a fire at a data center. Started as a messaging app more than a decade ago, KakaoTalk has become a universe unto itself, with services covering banking and payments, ride-hailing, maps and games. It is found on more than 90 percent of phones in South Korea.

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The days-long outage and the havoc it caused has stirred a national reckoning over the country’s growing dependency on Big Tech. The company and a government minister have apologized. Describing KakaoTalk as “nationwide infrastructure,” President Yoon Suk-yeol of South Korea ordered an investigation into the incident, invoking concerns about a monopoly.

On Wednesday, four days after the fire at the data center in Pangyo, near Seoul, a senior Kakao executive took responsibility for the disruption and resigned. By then most Kakao services had been restored.

Still, questions remained about why the company seemed to lack a contingency plan to restore services more quickly. The fire also affected Naver, another internet conglomerate in South Korea, but that company was able to bounce back much more quickly than Kakao.

Namkoong Whon, a co-chief executive of Kakao, was ultimately in charge of the data operation. He said he “felt a great responsibility” for the outage and said the company would assist with a government probe into the fire.

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Hong Eun-taek, Kakao’s other co-chief, will now hold sole leadership of the company. Joining Mr. Namkoong at the news conference, he said Kakao plans to compensate businesses that had taken a hit from the outage and ensure another outage is prevented.

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“We caused a great inconvenience to everyone,” said Mr. Namkoong, 50. “I know that now more than ever it will take a long time and lots of effort to gain back the trust that we have lost.”

Multiple groups of customers are preparing a class-action suit against Kakao, according to a Korean news outlet. Lawyers have claimed that the accident was the result of “negligence” and inadequate preparations. Kakao’s stock price dropped sharply in Seoul on Monday, the first day of trading after the outage, but had pared most of the losses by Wednesday.

Kakao and Naver often draw comparisons to China’s WeChat, a so-called superapp that’s an amalgam of messaging, payment, delivery services and more. In South Korea, the rapid growth of the internet behemoths has invited scrutiny comparable to that faced by the country’s “chaebols,” the family-run conglomerates that have long dominated the country’s economy.



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