Flood of Damage Reports... Kakao Compensation Scale to Increase

Questioning on Compensation for Damages at National Audit
Political Circle Demands Active and Free Service Compensation
Kim Beom-su to Attend Science and ICT Committee National Audit on 24th

On the 20th, as Kakao entered an emergency management system following a data center fire outage and the resignation of CEO Namgung Hoon, employees were arriving at the lobby of Kakao Ajit in Seongnam, Gyeonggi Province. Photo by Kang Jin-hyung, Seongnam aymsdream@

[Asia Economy Reporter Seungjin Lee] Cases of damage caused by service disruptions at Kakao due to a data center fire are rapidly increasing. Apart from Kakao's own reporting channels, the Federation of Small and Medium Business has collected thousands of cases, suggesting that the overall compensation scale is expected to grow significantly.

According to the industry on the 24th, the Federation of Small and Medium Business received 1,450 damage reports by 4 p.m. the previous day. Initially, the Federation planned to accept reports only until the 21st, but due to the flood of complaints, they decided to extend the submission deadline to the 31st.

Based on cases received by the 21st, the transportation industry (taxis, freight, etc.) accounted for the largest share at 33.57%. This was followed by the food service industry (24.19%, including Korean, Chinese, pizza, chicken, snacks, coffee, etc.), wholesale and retail (13.99%, including clothing, flowers, lighting, electronics, etc.), and service industries (16.52%, including hair, nails, skincare, advertising agencies, golf, counseling, etc.). More than half of these users were paying customers, with KakaoT services and Kakao advertising being representative paid services affected.

Kakao opened a reporting channel on the 19th and began accepting cases. Although they have not disclosed the status of damage reports, it is known that a considerable number of cases have been submitted after Kakao announced it would consider compensation for users of free services.

The case of individual compensation following the KT Ahyeon branch fire in Seodaemun-gu, Seoul, on November 24, 2018, is also being referenced. KT paid up to 1.2 million KRW to 12,000 small business owners and provided discounts on usage fees ranging from 1 to 6 months depending on the damage to individual customers. The total compensation amount paid by KT at that time reached 40 billion KRW.

Banner for damage reports related to the Kakao service incident by the Federation of Small and Medium Business (Photo by Federation of Small and Medium Business website)

As Kakao's compensation burden increases, the political sphere has begun pressuring Kakao regarding damage compensation. On the 21st, Ryu Geung-seon, CEO of Kakao Mobility, who attended the National Assembly Land, Infrastructure and Transport Committee hearing as a witness, was criticized by lawmakers over compensation issues.

Sim Sang-jung, a Justice Party lawmaker, pointed out that "KakaoT Blue, Venti, and Black franchise taxis have already assessed their losses, so should drivers have to report individually?" She emphasized that Kakao Mobility should take proactive compensation measures. In response, CEO Ryu said, "KakaoT Blue was able to operate roaming services, but Venti and Black could not operate 100%," adding, "We empathize with the pain and will actively work on compensation," showing signs of strain.

Han Jun-ho, a Democratic Party lawmaker, questioned plans for compensation beyond the scope of the terms and conditions. CEO Ryu replied, "Since there are many shortcomings in the terms, we will negotiate openly without limiting ourselves to the terms," and "We will identify various cases."

Meanwhile, on the same day, Kim Beom-su, Head of Kakao Future Initiative Center (former Chairman of Kakao's Board), will appear as a witness at the National Assembly Science, Technology, Information and Broadcasting Committee hearing. Questions and answers are expected regarding the circumstances of the nationwide service disruption caused by the data center fire, measures to prevent recurrence, and compensation plans.

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