Kakao founder considers sweeping compensation for service blackout

Kim Beom-su, founder of South Korean online platform behemoth Kakao, said Monday that he will consider providing across-the-board compensation for users who suffered damages due to the company’s unprecedented service malfunction caused by a fire at an SK C&C data center on Oct. 15.

"We are currently accepting damage reports from the users, so it is difficult to specifically tell the type and size of our compensation. We are reviewing all measures to help (users) recover,” Kim said during a state audit for the Science, ICT, Broadcasting and Communications Committee at the National Assembly.

The lawmakers stressed that Kakao should pay compensation to all users, including those who failed to access free services including KakaoTalk, the IT firm's immensely popular messenger app utilized by over 90 percent of the entire population.

Since the incident, Kakao has so far come up with compensation measures for those who use paid services such as music streaming platform Melon, Kakao’s web comics and Kakao T’s premium taxi-hailing option, according to the company's terms and conditions.

Kakao CEO Hong Eun-taek, who was also summoned by the committee, said the compensation for paid service users is expected to be worth around 40 billion won ($27.7 million)

Asked about public concerns that reparations may be delayed as Kakao and SK C&C seem to be gearing up for a legal dispute over the responsibility of the damage compensation, Kim vowed to take all necessary measures to reimburse affected users as soon as possible, regardless of a lawsuit.

Kim, however, made it clear that he will not return to a management position at Kakao, adding that Kakao and its subsidiaries have been led by professional leaders for a while now.

SK C&C CEO Park Sung-ha echoed Kim’s opinion of prioritizing compensation for the public.

“We will proactively participate in discussions about compensation even before the cause of the incident is clarified. The talks will be held not only at (SK C&C), but also at (the highest levels of SK Group),” said Park.

In addition to Kim, Hong and Park, the committee summoned SK Group Chairman Chey Tae-won, Naver co-founder and current global investment officer Lee Hae-jin, Naver CEO Choi Soo-yeon and Minister of Science and ICT Lee Jong-ho.

Chey showed up late to the audit at 8:30 p.m. after Rep. Jung Chung-rae of the main opposition Democratic Party of Korea, chair of the science committee, denounced Chey's absence once at the beginning of the audit at 10 a.m. and twice in the afternoon. The SK Group leader earlier cited attending a forum on the same day and preparing for an upcoming presentation as part of Busan's bid to host the World Expo in 2030 as the reason for his absence.

“We feel much responsibility about this blackout incident. I want to apologize to the public first, the users who suffered damage and our customers,” said Chey.

He added that the group is preparing to make reparation discussions go faster once Kakao finalizes collecting damage reports and concludes the scale and range of compensation. Kakao is accepting damage reports through Nov. 1. 

Naver's Lee apologized for the company's service malfunction, adding that there were inconveniences to users despite the employees responding properly according to the crisis management manual.

Earlier in the day, the Korea Driver Service Society and three other groups estimated the average loss for paid designated drivers at 178,000 won from Kakao’s driver-calling service outage.

"Compensation for (paid designated drivers) who use free services, which are not stipulated in the terms and conditions, is far from being carried out,” the groups said in a press conference held in front of the National Assembly.

According to the groups, over 90 percent of the 382 paid designated drivers who filed damage reports could not receive driver-hailing calls while Kakao’s servers were down. The groups said they would not accept Kakao’s compensation of 4,260 won -- equivalent to six days of the paid service -- to those who use the premium membership.