'Free Service' KakaoTalk Generates 2.6 Trillion KRW Revenue from Ads in One and a Half Years

Assemblyman Kang Ming-guk: "Infrastructure stability checks and investments neglected... Cause of 'blackout incidents'"
Political circles call for "'free service' compensation" voices
Kakao plans to review measures after receiving damage reports

From last year to the second quarter of this year, Kakao has generated a total revenue of 2.558 trillion KRW from KakaoTalk advertisements.
[Image source=Yonhap News]

[Asia Economy Reporter Yoon Seul-gi] Kakao, criticized for a large-scale outage, has reportedly earned advertising revenue amounting to 2.6 trillion KRW over the past year and a half through KakaoTalk. In political circles, there are criticisms that Kakao neglected infrastructure expansion despite generating advertising revenue based on its overwhelming market share while providing many services for free.

According to the 'Kakao TalkBiz Revenue Status' data requested by Kang Min-kook, a member of the National Assembly's Political Affairs Committee from the People Power Party, from the Fair Trade Commission on the 21st, Kakao earned a total of 2.558 trillion KRW in revenue from KakaoTalk advertising from last year through the second quarter of this year.

Kakao TalkBiz revenue was 1.6439 trillion KRW last year and 914.1 billion KRW up to the second quarter this year. It is expected that the revenue for the fourth quarter of this year could surpass last year's revenue. Kakao TalkBiz is an advertising product that allows advertisers to expose products and services or deliver messages based on the KakaoTalk service. There are types such as advertising using Biz Board, KakaoTalk Channels, emoticons, and transaction types using commerce like Kakao Gift.

Among TalkBiz, the Biz Board, which is displayed at the top of the KakaoTalk messenger screen, was used by a total of 9,015 companies as of this year. Of the total companies, 20.7% (1,868) were classified into 13 industry categories, and 79.3% (7,147) were in other unclassified industries. Kang interpreted this as meaning that almost all industries, including large domestic corporations, small and medium enterprises, and individual businesses, use KakaoTalk advertising.

Kang pointed out that despite Kakao generating enormous revenue through advertising on KakaoTalk, investment in infrastructure and service improvements has been insufficient. He criticized, "The main cause of the recent 'Kakao outage' crisis, which caused great confusion and massive damage to the public, was that Kakao focused only on sprawling expansion and profit generation while postponing infrastructure stability checks and investments."

Kang also said, "Kakao is particularly obsessed with maximizing profits through expanding its advertising business by exploiting the 'lock-in effect' that binds consumers based on KakaoTalk's overwhelming market share, making it difficult for users to find alternatives. The Fair Trade Commission and the Ministry of Science and ICT should establish merger review standards specialized for platform companies to regulate indiscriminate business expansion driven by capital."

Many users experienced inconvenience as multiple services from Kakao's affiliates, including the messenger application KakaoTalk, KakaoPay, and KakaoNavi, encountered disruptions due to a fire that occurred on the afternoon of the 15th at the Pangyo data center.
[Image source=Yonhap News]

Meanwhile, voices in political circles call for compensation even for free services. On the 17th, Cho Seung-rae, a member of the Democratic Party of Korea, said on CBS Radio's 'Kim Hyun-jung's News Show,' "Even if it is a free service, if damage is proven or if the damage is sufficiently understandable, compensation should be provided," adding, "Because it is related to restoring public trust in Kakao, there is a need to actively approach free services from this perspective."

There is also an opinion that since service disruptions continue to occur in value-added telecommunications service providers like Kakao, these providers should also be obligated to compensate for losses. On the same day, Park Chan-dae, a Supreme Council member of the same party, said on MBC Radio's 'Kim Jong-bae's Focus,' "Telecom companies can be held responsible for loss compensation, but value-added telecommunications service providers like KakaoTalk are not subject to compensation obligations," and argued, "The law should include grounds for loss compensation for value-added telecommunications service providers to expand consumer protection and enable broader damage compensation."

In this regard, Kakao announced that it would consider compensation measures for free services. On the morning of the 19th, at a press conference held at the new Pangyo headquarters in Seongnam, Gyeonggi Province, regarding the 'Pangyo Data Center Fire-related Outage,' Hong Eun-taek, CEO of Kakao, said, "There are no precedents or standards for compensating free service users, so we will review various cases to determine what examples exist," adding, "It will take time to create policies after confirming cases. For now, we will keep the reception channel open for about two weeks."

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