[2022 National Audit] Criticism of Kakao's 'Consideration of Compensation for Free Services' Statement... Call for User Protection

Kang Sang-hyuk, Chairman of the Korea Communications Commission, "Even if outside the age limit, whether there is failure damage should be considered and discussed with the business operator"
Points out shortage of dispute mediation personnel at KCC
Raises need to re-push Onple Law

Namgoong Hoon (left) and Hong Eun-taek, co-CEOs of Kakao, are offering a public apology on the 19th at Kakao Pangyo Ajit in Seongnam-si, Gyeonggi Province, regarding the large-scale outage caused by a data center fire.

[Asia Economy Reporter Minyoung Cha] The "Kakao outage" incident was brought up during the comprehensive national audit of the Korea Communications Commission (KCC) by the National Assembly’s Science, Technology, Information and Broadcasting Committee held on the 21st. The focus of the lawmakers' inquiries was whether the KCC, the competent authority, is properly monitoring Kakao’s post-incident measures and compensation plans.

Kim Young-sik, a member of the People Power Party, criticized Han Sang-hyuk, chairman of the KCC, saying, "The opportunity for Kakao to secure various users across multiple platforms was through free messaging," and added, "Despite enabling free use and generating enormous profits through paid services, isn’t Kakao neglecting its social responsibilities?"

This remark targeted Kakao CEO Hong Eun-taek’s statement at a press conference on the 19th, where he did not clearly address whether compensation would be provided to users of the free service. CEO Hong said, "There is no precedent for compensation for free services, so we need to review existing cases and make a judgment," adding, "The direct compensation amount itself is expected to be small, and indirect compensation can be estimated by setting standards."

When asked about compensation and damages, KCC Chairman Han Sang-hyuk replied, "There is both compensation and damages," and explained, "Damages are due to illegal acts, so it will take time depending on proof," while stating, "We need to review the terms and conditions for each service to ensure sufficient compensation according to those terms. Even if it goes beyond the scope of the terms, actual damage should be addressed through consultation with the service providers." He also added that interpretation of the compensation-related terms and conditions should precede any action.

Criticism was raised regarding Kakao’s announcement of the service error status through its Twitter account, which had only tens of thousands of followers, immediately after the fire incident on the 15th. While KakaoTalk has 50 million users, the Kakao Twitter account has only about 36,000 followers.

When People Power Party lawmaker Ha Young-je asked whether the announcement via Twitter was appropriate, Chairman Han responded, "It seems that this was done in the process of finding alternative means as the company’s services were paralyzed," and added, "We are reviewing whether the immediate notification was properly carried out." He further stated, "I don’t think it was done to keep the information from being widely known."

Regarding future user protection measures, he said, "We are closely checking whether service providers are following the legally prescribed proper notification procedures related to user service interruptions," and added, "We have arranged for continuous receipt of damage reports through consultations with Kakao and Naver, and reports are also being accepted through internal KCC agencies."

On the issue of the KCC’s lack of personnel for dispute response, he said, "The Communications Dispute Mediation Committee was established without anticipating large-scale incidents like Kakao’s, so there is a need to increase staff," and added, "Currently, there are 10 mediators, and we are working to amend laws to increase this number to 30." He continued, "However, regarding this incident, reports are being received through the 'Online Damage 365 Center,' and the number of cases has not exploded," explaining, "Most reports are made via KakaoTalk, and small business owners report separately through the Small Business Association. The KCC will strengthen its capacity going forward."

In response to Democratic Party lawmaker Jung Pil-mo’s question that "measures to protect users of value-added communication service providers should be strengthened," Chairman Han said, "I agree that measures need to be strengthened to ensure effectiveness," but added, "Since value-added communication service providers offer diverse service types, it seems necessary to consider how to define exceptions."

There were also calls for the re-promotion of the "Online Platform User Protection Act (On-Platform Act)," which the KCC had been pushing for legislation last year, triggered by the Kakao outage incident. Since the inauguration of the Yoon Suk-yeol administration this year, the regulatory stance on online platforms has shifted to "self-regulation," causing the On-Platform Act to lose momentum and remain pending.

Chairman Han said, "Regulation of platform companies is being handled through cooperation among all ministries, and related fundamental principles have been announced," adding, "If serious problems arise in user protection, I believe legal regulation will be necessary in that area."

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