Kakao Proposes 300 Billion Compensation Plan... "Fulfilling Social Responsibility" (Comprehensive)

Small Business Owners to Receive Up to 50,000 Won... First Compensation for Free Services

Kakao announced the service disruption damage support plan established by the '1015 Damage Support Council' on the 29th.
[Photo by Kakao]

[Asia Economy Reporters Yuri Choi and Seungjin Lee] Kakao has proposed a compensation plan exceeding 300 billion KRW for the service outage that occurred last October. Small business owners affected will receive up to 50,000 KRW, and general users will be given emoticons and other benefits uniformly. Although compensation for free services is unprecedented, the company decided on a blanket support as part of its social responsibility.

Up to 50,000 KRW for Small Business Owners... Uniform Compensation for General Users

On the 29th, Kakao announced the service outage damage support plan established by the ‘1015 Damage Support Council (hereafter, the Council).’ Compensation will be divided between general users of Kakao services and business partners who suffered operational losses due to the outage.

General users will receive a total of three types of emoticons (one for permanent use, two for 90-day use). This is intended as a promise from Kakao to provide stable services in the future and as an apology. In addition to the Council’s agreement, Kakao will provide two types of appreciation coupons (2,000 KRW and 3,000 KRW) usable on ‘Kakao Makers’ and a one-month subscription (for 3 million users) to KakaoTalk’s data management service ‘TalkSrap Plus.’

For small business owners who reported damages, support funds will be provided according to the scale of sales loss. This takes into account small business operating profit margins, availability of alternative services, and Kakao’s market share of the affected service. Accordingly, if the sales loss is 300,000 KRW or less, 30,000 KRW will be provided; if it exceeds 300,000 KRW but is 500,000 KRW or less, 50,000 KRW will be provided. The Council determined the support brackets after analyzing reported damage cases and considering the median amount of reported damages.

For damage cases exceeding 500,000 KRW, additional support will be considered through Council review and damage verification processes. Separately, following a proposal from the Small Business Federation, a ‘KakaoTalk Channel Cash Program for Small Business Owners’ will be established. This program provides free cash worth 50,000 KRW that can be used to send KakaoTalk channel messages to all small business owners.

Major affiliates such as Kakao Games, Kakao Mobility, Kakao Entertainment, and Kakao Pay have also prepared support measures for partners affected by this outage. Kakao Games will enhance benefits for affiliated PC cafes and promote offline regional PC cafe tournaments and neighborhood PC cafe events. Kakao Mobility will provide appreciation points ranging from 25,000 KRW to 50,000 KRW and transportation support funds up to 10,000 KRW to designated driver members.

Unprecedented Compensation for Free Service Outage... Half of Last Year’s Operating Profit

This is the first compensation plan for a free service outage. Given the unprecedented nationwide impact of the Kakao blackout, a proactive compensation plan was proposed. Although it was mostly difficult to find a clear causal relationship between the outage and individual damages due to the existence of alternative services, Kakao explained that it is fulfilling its social responsibility.

Kakao CEO Eun-taek Hong said, “This damage support is the beginning of a process to answer the questions society has posed to us following the 1015 outage,” adding, “In the new year, we plan to identify and implement necessary tasks from a mid- to long-term perspective.”

The Council’s compensation plan is estimated at about 310 billion KRW. The emoticon benefits provided to the general public are valued at 310 billion KRW, and compensation for small business owners is estimated around 2 billion KRW. This is about half of Kakao’s 600 billion KRW operating profit last year. Including compensation separately provided by Kakao beyond the agreement, the total exceeds 500 billion KRW. This includes Kakao Makers coupons worth 240 billion KRW and TalkSrap Plus valued at about 6 billion KRW.

A representative from the Small Business Federation said, “We considered costs spent on KakaoTalk channel inflows, which are marketing tools, beyond provable damage amounts,” and evaluated, “Although regrettable, we worked hard to obtain actual damage compensation and achieved some results.”

Meanwhile, the Council analyzed 87,195 Kakao cases excluding affiliate reports from a total of 105,116 cases received through Kakao’s official channels. General users accounted for the majority of damage reports at 79.8%, followed by small business owners at 20%, and medium to large enterprises at 0.2%. Among all cases, 14,918 (17.1%) were reports of damage related to paid services, and about 13,195 (15.1%) mentioned monetary damage related to free services. The remaining 59,082 cases (67.8%) were inquiries, opinions, complaints, encouragement, and other non-monetary damage related matters.

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