'Kakao Outage' Incident Leaves Kakao Retail Investors "Dreading Monday"

Samsung Electronics Next, 2.4 Million Kakao Shareholders Face Stressful Weekend
KakaoPay (-43.1%) and KakaoBank (-34.7%) Also Decline Over the Past Month

[Asia Economy reporters Seunggon Han and Sumi Hwang] As a fire at a data center caused disruptions to Kakao-related services, shareholders' concerns have grown significantly. In particular, since this service error occurred again just 11 days after the incident on the 4th, shareholders' dissatisfaction is unlikely to subside easily.

Despite Kakao hitting new lows amid the stock market downturn, it succeeded in rebounding by over 8% on the 14th, closing at 51,400 KRW, raising shareholders' expectations. However, the service disruption issue that occurred over the weekend has heightened fears of a stock price decline. Some shareholders are anxious, wondering if Monday will become a "Black Monday," indicating a sharp drop in stock prices.

According to the Korea Exchange on the 16th, Kakao's stock price fell 26.5% over the past month. Major Kakao affiliates such as KakaoPay (-43.1%), KakaoBank (-34.7%), and KakaoGames (-26.1%) also experienced significant declines.

Adding insult to injury, a fire at the data center on the 15th triggered the service disruption. The ripple effects extended to KakaoBank, KakaoPay, and other affiliates, leading to negative evaluations of the entire Kakao group’s services on online communities and elsewhere. The damaged reputation, along with compensation issues, is expected to weigh on the stock price.

Kakao is known as the company with the second-largest number of small shareholders on the Korea Stock Exchange, following the leading stock Samsung Electronics. As of June, the first half of this year, the number of small shareholders investing in Kakao was counted at 2.04 million. KakaoTalk recorded over 47 million domestic monthly active users (MAU) as of last year.

The Kakao service disruption began around 3:30 p.m. on the 15th when a fire broke out at the SK C&C data center in Pangyo, Seongnam City, which Kakao leases. As a result, major services provided by the Kakao group simultaneously stopped. KakaoTalk’s mobile functions were inoperable, preventing users from sending messages, and the PC version was also unavailable. Affiliate services requiring KakaoTalk account login, such as KakaoPay, KakaoBank, KakaoT (taxi), KakaoSubway, and KakaoMap, were also not functioning properly. Some services of Daum and Naver, the largest domestic portal services, also experienced disruptions.

Users endured inconveniences in telecommunications, transportation, and finance during the error that lasted over 10 hours. Taxi drivers using KakaoT lamented that they could not receive calls on a Saturday, when they usually get more passengers, suffering significant losses. Passengers trying to use taxis faced the same difficulties. On social networking services (SNS), numerous posts appeared reporting failure to call taxis and arriving late to appointments. Many also experienced payment difficulties due to the malfunctioning financial services.

Kakao co-CEOs Namgoong Hoon and Hong Euntaek officially apologized on the 15th for the prolonged service disruptions, including KakaoTalk, caused by the SK C&C data center fire. In their apology statement, they said, "We sincerely bow our heads and apologize to all users who have experienced inconvenience due to the service disruptions of KakaoTalk, Daum, KakaoT, KakaoPay, and other Kakao services."

This content was produced with the assistance of AI translation services.