Kakao shares slump after widespread service outage

October 17, 2022 - 9:32 AM
FILE PHOTO: The Kakao messaging application and the Kakao T taxi booking application are seen on a mobile phone in this illustration photo March 13, 2018. (Reuters/Thomas White/Illustration/File Photo)

SEOUL — Shares in South Korea’s Kakao Corp. plunged more than 9% on Monday after a fire at a data center south of Seoul damaged servers on the weekend, causing an extensive service outage in the country’s main chat app.

The outage of the chat app, predominantly used in South
Korea for both private and business exchanges, as well as services including payments and gift exchanges, taxi hailing, maps and log-in access for other apps, crippled communications in Asia’s fourth-largest economy.

President Yoon Suk-yeol said on Monday that Kakao’s services
are “like a fundamental national telecommunications network as far as the public is concerned,” and follow-up measures over the service outage will be pursued.

“If the market is distorted in a monopoly or severe oligopoly, to the extent where it serves a similar function as national infrastructure, the government should take necessary measures for the sake of the people,” Yoon added, noting South Korea’s antitrust watchdog would examine the matter.

Kakao shares fell to its lowest since May 2020, while shares in Kakao affiliates KakaoPay and KakaoBank also plunged more than 8% in morning trade.

A Kakao spokesperson told Reuters on Monday services such as messaging have been restored, but miscellaneous services are still being restored.

Police and the National Forensic Service plan to conduct their second examination on Monday at the data center, which is operated by SK C&C.

After an initial probe on Sunday, police said electrical issues around battery racks in third basement floor may have caused the fire.

Kakao’s messenger app Kakao Talk has more than 47 million active accounts in South Korea and 53 million globally, the company said in a report in August.

Kakao said on Monday the financial effects of a widespread
service outage were expected to be limited on Kakao and its key
units.—Reporting by Joyce Lee; Additional reporting by Choi
Soo-hyang, Joori Roh, Hyonhee Shin and Jihoon Lee; Editing by
Kim Coghill, Tom Hogue and Sam Holmes