Kakao’s co-CEO steps down amid public anger over chat app shutdown

Kakao’s co-CEO steps down amid public anger over chat app shutdown

Kakao’s co-CEO steps down amid public anger over chat app shutdown

  • Cocoa promises to invest in infrastructure to ensure continuity
  • ‘All thoughts revolved around…profit’ – former CEO
  • Lawmakers are proposing a bill that would require system backups

SEOUL, Oct 19 (Reuters) – Kakao Corp (035720.KS) Co-CEO Namkoong Whon resigned on Wednesday as South Korea’s biggest mobile chat app sought to clear the public anger due to a major outage that left tens of millions of people without access to a wide range of services.

The company has pledged to increase investment to ensure continuity in the data centers it uses amid growing concerns about the application’s dominance of the market in Asia’s fourth-largest economy.

Namkoong’s resignation comes just seven months after he took over the top job and left co-CEO Hong Euntaek, appointed in July, as sole chief executive.

Register now for FREE unlimited access to

The two apologized for the outage that began on Saturday due to a fire at a data center run by SK C&C (034730.KS) near Seoul, which cut power to 32,000 servers, or about 30% of the total number of Kakao servers.

“We have not prepared for a complete shutdown of the entire data center,” Hong said at a press briefing, adding that previous emergency drills had mostly involved contingencies due to traffic surges.

“We will increase investment in infrastructure so that we can be prepared to shut down one or two data centers.”

He noted that while there was no data loss due to the backup plans, developer tools were not built.

Most of its systems were restored by Wednesday, but various functions remain unstable after disruptions to a wide range of services, from payments to taxis and restaurant reservations.

“While Kakao has become a public service used by the majority of the public, we have neglected the responsibilities that come with our status,” Hong said.


KakaoTalk, launched in 2010, has more than 47 million active accounts in South Korea, making it one of the most popular apps in the country of 51.6 million.

The free messaging service took mobile users by storm soon after smartphones became popular in the late 2000s, and its early-mover advantage allowed it to outpace rivals including tech giant Naver to become South Korea’s dominant chat app.

It was later able to leverage its large user base to expand into gaming, advertising, intellectual property and other entertainment, shopping, payments and mobility.

Hong, who also heads the company’s response to the outage, said Kakao will investigate why work to restore services has been slow, review compensation for users and companies affected by service outages, and build its own data centers.

Namkoong, whose responsibilities included overseeing data center operations, will remain in an advisory role to ensure the problem does not recur.

“As the CEO in charge of the business…all thinking revolved around sales and operating profit. Instead of staying in that role, I recognize the gravity of the situation,” Namkoong said.

“For a technology company, the system is like water or air… as (Cocoa) has grown rapidly in recent years, we are reassessing the need for deeper interest and investment in this area.”

Kakao is investing 460 billion won ($325 million) in building its own data center starting next year, with another to be completed next year, the statement said.

More than 650 small businesses have complained about lost sales due to Kakao’s disappearance, lobby group Korea Federation of Micro Enterprise said.

The ruling party’s policy chief said on Wednesday that lawmakers will propose a bill requiring companies like Kakao to back up their systems.

Reconstruction and the biggest disruptions in services so far close a stormy year for Kakao.

The group’s billionaire founder Brian Kim stepped down from the board, and Namkoong was tapped for the top job in March after controversy including stock options exercised by some executives in its financial subsidiary shortly after the IPO.

Shares of Kakao rose by as much as 5.7% on Wednesday. Shares of Kakao fell as much as 9.5 percent on Monday to their lowest level since May 2020, wiping out 2 trillion won ($1.39 billion) in market capitalization at one point.

($1 = 1,415,6400 won)

Register now for FREE unlimited access to

Reporting by Joyce Lee; Writing by Miyoung Kim; Editing by Sam Holmes

Our standards: Thomson Reuters Trust Principles.

#Kakaos #coCEO #steps #public #anger #chat #app #shutdown

مقالات ذات صلة

اترك تعليقاً

لن يتم نشر عنوان بريدك الإلكتروني. الحقول الإلزامية مشار إليها بـ *

زر الذهاب إلى الأعلى
سيتات آورج 2022 سيتات آورج 2022