SEUL, Oct. 19 (Reuters) – In an effort to calm public outcry following a catastrophic outage that cut off services to tens of millions of people in South Korea, Kakao Corp (035720.KS) co-CEO Namkoong When resigned on Wednesday.
In light of rising concerns about the app’s market domination in Asia’s fourth-largest economy, the company has promised to enhance investment to maintain continuity at the data centres it uses.
Since Namkoong’s departure, co-CEO Hong Euntaek, who was hired in July, has taken on the role of sole CEO. Namkoong was only in the top position for seven months.
The two expressed regret for the disruption in service that began on Saturday as a result of a fire at a data centre operated by SK C&C (034730. KS) close to Seoul, which caused the shutdown of 32,000 servers, or around 30% of Kakao’s total.
At a press conference, Hong admitted, “We did not prepare for a total shutdown of an entire data centre.” Rather, earlier emergency drills had focused on preparing for traffic spikes.
To be ready for the potential closure of one or more data centres, we will boost our spending on supporting infrastructure.
While data was not lost, he said, programmers’ resources were not backed up.
What’s happening in South Korea. #kakaotalk is down. pic.twitter.com/z89P5ab0J6
— Sujin Keen (@staykeen_eth) October 15, 2022
By Wednesday, most of its systems had been repaired, but a few lingering issues remained. These issues affected a wide variety of services, including payments, taxi bookings, and restaurant reservations.
The majority of the population now utilises Kakao, but despite this fact, “we’ve neglected obligations surrounding our standing,” Hong stated.
‘LIKE WATER OR AIR’
KakaoTalk is one of the most widely used apps in South Korea, with over 47 million registered users out of a total population of 51,6 million.
The free messaging service became wildly popular among mobile users not long after the advent of smartphones in the late aughts, and it has since surpassed its rivals, notably the internet behemoth Naver, to become the preeminent chat software in South Korea.
Eventually, it was able to capitalise on its sizable user base by branching out into areas including gaming, advertising, intellectual property, e-commerce, payment processing, and mobile applications.
Hong, who is also in charge of the company’s response to the outage, stated that Kakao would investigate the cause of the delay in service recovery, assess the compensation it offers to customers and businesses whose services were interrupted, and begin construction on its own data centres.
Namkoong, whose duties included supervising the operations of the data centre, will continue to serve in an advising capacity to make sure the issue does not arise again.
“Sales and operating profit were at the forefront of my mind as CEO. I can no longer continue in that capacity; the stakes are too high “Namkoong said.
Since (Kakao) has expanded so rapidly over the past few years, we are reassessing the necessity of investing more heavily in the system.
On Wednesday, the police chief of the ruling party announced that legislators intend to submit a measure mandating that corporations like Kakao back up their systems.
Kakao had a rough year capped by the reorganisation and its largest-ever service outages.
Billionaire founder Brian Kim resigned from the board in March amid a scandal involving stock options exercised by several executives at the group’s financial affiliate shortly after the IPO. Namkoong was then appointed as CEO.
Kakao stock was up as much as 5.7% on Wednesday. On Monday, Kakao shares dropped as much as 9.5%, hitting a new low not seen since May 2020. The drop was enough to wipe away 2 trillion won ($1.39 billion) of market capitalization.
