South Korea's top instant messenger plunges after outage prompts calls for monopoly probe

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

The outage was triggered by a fire at the data center, which also hosts servers for other major Korean tech companies. KakaoTalk is not only South Korea's top messaging app, it is also heavily relied on for everything ranging from online payments, gaming and ride hailing as well as log-in verification for other major websites.

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

South Korean President Yoon Suk-yeol described the impact of Kakao's outage as "no different from the national communication network." He called on relevant ministries to investigate the exact cause and scope of the disruptions and drum up plans to prevent similar incidents.

"If there is a monopoly or an oligopoly situation where it manipulates the market, we need to take systemic measures from a nationwide level for the interest of the people," Yoon said Monday.

On Monday, shares of Kakao Corp. plunged more than 9% at the open before paring losses to close almost 6% lower. Internet giant Naver shed 2% in the morning session before rebounding to close 0.91% higher. Naver also briefly faced limited disruptions as the data center also hosts servers for the company, but resumed most of its operations on Sunday.

The data center's operator, SK Inc, also fell more than 4% at the open. Kakao's subsidiaries Kakao Pay, Kakao Bank and Kakao Games all plunged more than 7% in Korea's morning session before trimming some losses. Kakao Bank closed 5.14% lower, Kakao Pay shed 4.16%, and Kakao Games was down 2.22%.

Kakao initially announced service disruptions Saturday afternoon, which continued into Sunday morning.

"We bow our heads and sincerely apologize to all users who are facing Kakao service disruptions at the moment," the company's co-CEOs said in a statement over the weekend.

"We promise to take the maximum measures to prevent issues like these from recurring as well as investigating the cause of this incident," they said, adding that the company has been working to back up data to other facilities within the country as soon as the fire broke out.

"This is a rare case of one data center being completely affected, so it's taking a lot longer than expected to implement these [back up] measures," they said.

In a Monday morning tweet, Kakao said some services have resumed, but users continued to report issues.

Yoon's deputy spokesperson Lee Jae-myoung said in an afternoon briefing that the presidential office will be launching a national task force to discuss the messenger service's outage.

"The National Security Council has decided to put together a cyber security task force in light of the latest Kakao disruption situation," Lee said, adding that this will include military officials and the national intelligence agency.

South Korea's science minister Lee Jong-ho said on Sunday, "The government is taking this very seriously as the failure of communication services' stability means the people's economic and social activities could be paralyzed."