Kakao CEO Namgung Hoon Resigns "Deeply Responsible... Will Fulfill Final Duties" (Comprehensive)

Dishonorable Resignation Before Term Ends
Hong Eun-taek, Leading Disaster Response Subcommittee Under Emergency Committee, Focuses on Accident Recovery
Hong Eun-taek, Sole Representative, Says "Compensation, Service Infrastructure Investment... Full Effort to Resolve Situation"
On Responsibility Dispute, States "No Special Response... Not Yet at Reimbursement Discussion Stage"

[Image source=Yonhap News]

[Asia Economy Reporters Yuri Choi, Nahum Kang, Seungjin Lee] Namgoong Hoon, co-CEO of Kakao, resigned taking responsibility for the Kakao service outage caused by the SK㈜ C&C data center (IDC) fire. Namgoong, who took office in March this year, stepped down before completing even one year of his term. Kakao plans to establish compensation policies for victims and significantly expand infrastructure investments, including its own data centers, to prevent recurrence of such incidents.

CEO Namgoong Hoon Resigns... "Deeply Aware of Heavy Responsibility"

On the 19th, Namgoong Hoon and Hong Euntaek, co-CEOs of Kakao, held an emergency press conference at the Pangyo headquarters in Seongnam, Gyeonggi Province, where they issued a public apology and announced Namgoong’s resignation. This decision came five days after the fire on the 15th that completely paralyzed Kakao services.

Namgoong said, "Thinking about the users and partners who use Kakao services makes my heart even heavier," and bowed his head, stating, "I know that recovering lost trust requires greater and longer efforts than ever before." He added, "I feel devastated and deeply responsible," and declared, "To reaffirm my commitment to reform and change, I will step down as CEO and take full responsibility for this incident by leading the Disaster Countermeasures Committee with a heavy sense of duty."

Regarding his resignation, Namgoong explained, "The responsibility for IDC management falls under the CTO organization, which I oversee, so structurally, I judged that I am responsible for this incident."

He continued, "As the CEO responsible for the business, I have focused on sales and operating profits and made decisions centered on the business side. Rather than staying in the CEO position, I decided to step down to personally realize how important this incident is, and the company also made a decision to set this direction."

He said, "When I watch TV and see responsible persons resign after accidents, I have questioned whether that truly means taking responsibility," adding, "I believe that pouring all my capabilities into preventing recurrence is the proper way to take responsibility."

Namgoong stated, "This incident is a tragedy not only for Kakao but also for the IT industry," and said, "We will thoroughly investigate the causes and share the findings with system engineers responsible for infrastructure."

Namgoong took office as Kakao’s sole CEO in March. Founder Kim Beom-su entrusted the company’s direction to his trusted lieutenant, who had stepped in during crises. At that time, amid controversies such as the Kakao Pay management embezzlement scandal and a plummeting Kakao stock price, Namgoong was tasked with the heavy responsibilities of ‘restoring trust’ and ‘innovation.’

Even before his official inauguration, Namgoong set the tone by declaring he would only accept the legal minimum wage until the stock price recovered to 150,000 KRW, but he could not avoid responsibility for the Kakao outage incident. As the full service restoration was delayed until the fifth day after the fire, user distrust grew widespread, and the government and political circles announced strong regulations. Kakao faced its greatest crisis since its founding, and as a result, Namgoong stepped down before completing his one-year term.

Compensation and Infrastructure Investment... "Full Effort to Resolve the Incident"

With Namgoong’s resignation, Kakao will transition to a single CEO system under Hong Euntaek. Hong, who is chairing the emergency response committee for the fire incident, plans to devote all efforts to resolving the situation.

First, Kakao will establish compensation policies for all stakeholders, including users and partners affected by the service disruption. While damage reports have been accepted through customer centers so far, a separate reporting channel will be opened starting today.

Hong said, "We will consider compensation not only for paid service users but also for users, partners, and various stakeholders affected by this disruption," adding, "We will compensate first before disputing responsibility with SK."

Regarding compensation standards for free services, he said, "There are no precedents for free service compensation, so we need to review existing cases and make judgments. The direct compensation amount is expected to be small, but indirect compensation can be estimated by setting standards."

Additionally, Kakao plans to significantly expand infrastructure investments, including its own data centers. The goal is to build infrastructure capable of providing smooth service even if one data center completely stops, as happened in this incident.

Hong explained, "The delay in recovery was because while key data and service applications were duplicated, the main tools used by developers for work and operations were not duplicated. We will start duplicating these tools once the Pangyo data center’s operations stabilize. Within two months after stabilization, we will build an environment to prevent similar accidents."

Kakao is currently investing 460 billion KRW to complete its own data center in Ansan by next year. Construction of a data center in Siheung is also planned for 2024. Hong said, "We will build our own data centers more safely with fire prevention and seismic facilities, learning lessons from this accident."

[Image source=Yonhap News]

"No Responsibility Dispute with SK C&C... Not Yet at the Stage of Discussing Reimbursement"

While SK C&C bears primary responsibility for this incident, Kakao’s inadequate response was also confirmed again through CEO Hong’s remarks.

It was confirmed that although mock drills for traffic surges had been conducted, no drills had been done to prepare for a complete power outage at the data center. Hong said, "KakaoTalk has a kind of civil defense drill called a mock drill to manage KakaoTalk traffic. For example, the traffic surge occurs at year-end when the bell tolls, and we conducted drills for such situations."

He added, "There were no mock drills related to data center shutdowns, and there has never been a case where the data center itself was shut down. Most Kakao operational data services were duplicated, but the tools handling them were not duplicated, which was a mistake," he admitted.

However, Hong emphasized that SK C&C also bears significant responsibility. He said, "We built the servers, and SK supplied the power. The core issue was the power supply failure, and immediately after the accident, the lithium battery affected the cables, causing the servers to go down." He added, "We requested space and stable power supply, and I wonder what more responsibility we could have."

Regarding whether to claim damages from SK, Hong said, "It is not yet the stage to discuss reimbursement with SK. Once the cause of the accident is confirmed, discussions will begin, and regardless of reimbursement, we will do what we must." He also said, "There are talks about both sides disputing the cause, but we will not respond specially. I believe the forensic and investigation teams will transparently reveal the facts."

Meanwhile, Hong expressed a negative stance on calls for Chairman Kim Beom-su to directly intervene in resolving the incident. Hong said, "Founder Kim Beom-su is not involved in management. Selective intervention as needed is not desirable. The emergency committee has been formed for this issue, and Chairman Kim’s position will be heard at the National Assembly audit on the 24th."

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