Shares of Korean web big Kakao slide after hearth disrupts service • TechCrunch

The inventory worth of South Korea’s web big Kakao tumbled on Monday after a fireplace at a knowledge middle that reduce off energy on Saturday, inflicting a number of service malfunctions.

The blaze on the SK C&C information middle, which homes the servers of Korea’s two largest web corporations — Kakao and Naver — disrupted Kakao’s messaging, ride-hailing, fee and sport apps, and Naver’s web search and information companies, over the weekend.

Some disruption is ongoing — primarily affecting Kakao’s companies.

On Monday morning, Kakao’s share worth dropped greater than 9%. Its peer Naver additionally slid 2% on the opening of buying and selling earlier than recovering.

On the time of writing, Kakao stated it had restored KakaoTalk, the nation’s dominant messaging app — with greater than 46 million month-to-month energetic customers in South Korea as of September 2022 and 53 million globally. On Monday afternoon it additionally stated it had accomplished recovering its monetary companies. However another companies are nonetheless down.

In the meantime, Naver, which confronted partial disruptions on account of the hearth on Saturday, rapidly restored most of its operations on Sunday.

In response to a report by Bernstein, Kakao’s gradual restoration course of was brought on by the corporate’s lack of owned server infrastructure and “excessive dependence” on the SK C&C information middle. It additionally highlights Kakao’s lack of a effectively distributed backup system. The report identified that Naver was in a position to resume its main companies promptly as a result of it has owned server infrastructure and a well-designed backup course of.

KakaoTalk stays the dominant messaging service in South Korea and the Bernstein report predicts it should keep its place regardless of the outage, given how far behind its rivals are in marketshare phrases. Moreover, it factors out that Kakao’s messaging app is linked to different companies comparable to Kakao financial institution, fee and ride-hailing companies, so customers are unlikely to switch the app with much less totally featured alternate options like WhatsApp or Telegram, per the report.

The second largest messaging app after Kakao in South Korea is FaceBook Messenger nevertheless it has solely 3.9 million MAU as of September 2022. Whereas Naver’s messenger app, Line, has about 1.6 million month-to-month energetic customers.

In its assertion on Saturday evening, Kakao stated the hearth broke out at round 3:30 PM (native time). It added that it’s investigating the matter.

An announcement by Naver on Saturday afternoon stated it’s conscious of points impacting its companies on account of the hearth.

South Korean President Yoon Suk-yeol additionally made public feedback on Monday following the incident — remarking {that a} non-public firm operates KakaoTalk however describing it as virtually a nationwide communications infrastructure. Yoon known as on the federal government to research the precise causes of the hearth. “I respect company autonomy and creativity, however that’s primarily based on the premise that the market fairly allocates sources and revenue in a system of honest competitors,” Yoon stated. “If a monopoly state of affairs causes market manipulation, the federal government ought to take systemic motion.”