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

Barbie Espinol

The stock price tag of South Korea’s online big Kakao tumbled on Monday following a fireplace at a details heart that cut off electric power on Saturday, leading to quite a few service malfunctions.

The blaze at the SK C&C information middle, which homes the servers of Korea’s two greatest online firms — Kakao and Naver — disrupted Kakao’s messaging, journey-hailing, payment and match apps, and Naver’s net research and news services, about the weekend.

Some disruption is ongoing — primarily impacting Kakao’s expert services.

On Monday morning, Kakao’s share price dropped a lot more than 9%. Its peer Naver also slid 2% at the opening of investing in advance of recovering.

At the time of writing, Kakao reported it had restored KakaoTalk, the country’s dominant messaging app — with extra than 46 million month-to-month lively buyers in South Korea as of September 2022 and 53 million globally. On Monday afternoon it also mentioned it had completed recovering its fiscal services. But some other products and services are still down.

In the meantime, Naver, which faced partial disruptions as a consequence of the hearth on Saturday, immediately restored most of its operations on Sunday.

According to a report by Bernstein, Kakao’s gradual restoration procedure was caused by the company’s lack of owned server infrastructure and “high dependence” on the SK C&C information heart. It also highlights Kakao’s deficiency of a effectively dispersed backup system. The report pointed out that Naver was equipped to resume its primary products and services immediately since it has owned server infrastructure and a effectively-made backup procedure.

KakaoTalk continues to be the dominant messaging support in South Korea and the Bernstein report predicts it will maintain its situation in spite of the outage, provided how considerably guiding its rivals are in marketshare phrases. In addition, it points out that Kakao’s messaging app is joined to other companies these kinds of as Kakao lender, payment and ride-hailing expert services, so consumers are unlikely to swap the app with significantly less thoroughly showcased possibilities like WhatsApp or Telegram, for every the report.

The next biggest messaging application following Kakao in South Korea is Facebook Messenger but it has only 3.9 million MAU as of September 2022. Whilst Naver’s messenger app, Line, has about 1.6 million month to month lively customers.

Korea Internet & Media by Bernstein

In its statement on Saturday evening, Kakao said the fireplace broke out at all-around 3:30 PM (local time). It extra that it is investigating the subject.

A statement by Naver on Saturday afternoon stated it is informed of problems impacting its solutions as a consequence of the fire.

South Korean President Yoon Suk-yeol also made general public comments on Monday adhering to the incident — remarking that a personal corporation operates KakaoTalk but describing it as nearly a nationwide communications infrastructure. Yoon named on the government to examine the exact will cause of the fire. “I respect company autonomy and creativeness, but that is based on the premise that the current market fairly allocates methods and cash flow in a method of reasonable levels of competition,” Yoon said. “If a monopoly predicament will cause sector manipulation, the governing administration should get systemic motion.”

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