Shares of Korean internet giant Kakao slide after fire disrupts service • TechCrunch

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The share price of South Korea’s internet giant Cocoa plunged Monday after a fire in a data center cut power on Saturday, causing several service failures.

fire in SK C&C . Data Centerwhich houses the servers of Korea’s two largest internet companies – Kakao and Naver – has disabled Kakao’s messaging and payment delivery apps, games, web search services, and news from Naver over the weekend.

Some disruptions are ongoing – mainly affecting Kakao’s services.

On Monday morning, Kakao’s stock price fell more than 9%. Its Naver counterpart was also down 2% at the open, before recovering.

At the time of writing, Kakao said it has brought back KakaoTalk, the country’s dominant messaging app – with more than 46 million monthly active users in South Korea as of September 2022 and 53 million globally. It also said Monday afternoon that it had completed restoring its financial services. But some other services are still down.

Meanwhile, Naver, which faced partial disruptions as a result of the fire on Saturday, quickly returned to resuming most of its operations on Sunday.

According to a report by Bernstein, Kakao’s slow recovery process was caused by the company’s lack of proprietary server infrastructure and “heavy reliance” on SK C&C’s data center. It also highlights Kakao’s lack of a well-distributed backup system. The report noted that Naver was able to resume its core services immediately because it had a well-designed server infrastructure and backup process.

KakaoTalk remains the dominant messaging service in South Korea and Bernstein’s report predicts that it will maintain its position despite the outage, given how far behind its competitors have been in terms of market participation. In addition, the report notes that Kakao’s messaging app is linked to other services such as Kakao Bank, payment services, and transportation services, so users are unlikely to replace the app with less-featured alternatives such as WhatsApp or Telegram, according to the report.

The second largest messaging app after Kakao in South Korea is FaceBook Messenger, but it only has 3.9 million MAU as of September 2022. While Naver’s messenger app, Line, has around 1.6 million monthly active users.

Korea Internet and Media by Bernstein

In her statement Saturday evening, cocoa said The fire broke out around 3:30 pm (local time). She added that she is investigating.

Statement from Naver on He said Saturday afternoon It is aware of the problems affecting its services as a result of the fire.

South Korean President Yoon Seok-yeol also made public comments on Monday after the incident – noting that KakaoTalk was run by a private company but describing it as a national communications infrastructure. Yun called on the government to investigate the exact causes of the fire. “I respect the independence and creativity of companies, but this is based on the premise that the market sensibly allocates resources and income in a fair competition system,” Yoon said. “If the monopolistic situation causes market manipulation, the government should take systematic action.”

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