CEO of Kakao, South Korea’s Most Popular Messaging App, Resigns After Service Outage

The Kakao messaging app and the Kakao T taxi booking app are seen on a mobile phone in this illustration photo from March 13, 2018. Thomas White/Reuters

A top executive of Kakao Corp., a popular South Korean messaging app, stepped down Wednesday following a widespread service outage on the ubiquitious platform that millions of South Koreans use regularly for wiring money, chatting with friends, hailing taxis, and logging onto other major websites.

“As a CEO of Kakao, I feel miserable and strongly responsible for the incident. So I am stepping down from the post,” Kakao’s co-CEO Namkoong Whon said at a press conference, according to Yonhap News Agency.

“I would like to give an apology to all users,” he said. “I promise Kakao will do its best to restore public confidence.”

Namkoong, who became Kakao’s co-CEO in March, said he will now focus his efforts as part of the company’s emergency task force and help to resolve technical issues and prevent recurrences. The major outage started with a fire at a data center near Seoul, South Korea, on Saturday.

Namkoong said at the conference that “it will take time to repair all defects” and Kakao will “fully open probe results to the public.”

Flames at the data center were extinguished after 8 hours, but an immediate power shutdown led to a server outage, which resulted in a malfunction of the company’s online services.

Power was fully restored at the data center and all of Kakao’s servers are back online, the company said.

Critics have blamed Kakao’s over-reliance on third party servers and inadequate backup systems for the slow recovery.

“Data centers are supposed to be very safe from fire and other disasters. That’s basic,” said Shin Jin-Ho, co-CEO at Midas International Asset Management, according to Bloomberg. Midas manages $9 billion in assets, and Shin said the fund would be reducing its holdings in Kakao.

Kakao will now be headed by Hong Euntaek, one of the remaining CEOs of the company.

Dependence on Kakao

The widespread reliance on Kakao resulted in users being unable to carry out basic activities like hiring a cab, paying for groceries, or communicating with friends and family.

Launched in 2010, Kakao has more than 53 million users worldwide, with South Korea accounting for over 47 million. With a population of nearly 52 million people, this means about 90 percent of South Koreans use Kakao.

The service disruption has ignited debate among policymakers and consumers over whether a single app should have such a monopolistic hold on the market.

The fire ignited lithium-ion batteries and the power lines connected to the data center, Hong said. This led to the entire shutdown, and the company was not prepared for it, Bloomberg reported.

South Korean President Yoon Suk-yeol said the impact of the disruption at Kakao was “no different from the national communication network,” CNBC reported. The president called for a cybersecurity task force with military officials and the national intelligence agency to discuss the situation.

South Korean Science Minister Lee Jong-ho said on Sunday that the government is “taking this very seriously as the failure of communication services’ stability means the people’s economic and social activities could be paralyzed.”

As of Wednesday, the company’s shares had risen 5.7 percent after dropping by 9.5 percent on Monday. The stock has declined over 50 percent since the beginning of the year.

Reuters contributed to this report.