[Editorial] Dispute over regulations

The aftermath of the worst-ever server outage of Kakao Corp. over the weekend is still reverberating throughout the South Korean business and political sectors, with debates heating up over the scope of regulations for private firms.

The fire, which broke out Saturday at the data center in Pangyo, south of Seoul, paralyzed a wide range of mobile services run by Kakao, including the country’s biggest mobile messenger KakaoTalk.

The service outage, which lasted for more than 10 hours, caused great inconvenience for those who rely on KakaoTalk and related services, ranging from mobile payment to taxi-hailing to email.

The massive fire-induced server outage prompted public outcry against Kakao, which is accused of neglecting basic backup operation systems and contingency plans. In particular, Kakao's dependence on SK C&C's data center is considered one of the reasons for such critical glitches.

Aside from the criticism directed toward Kakao, which is building an independent data center in Ansan, Gyeonggi Province, disputes are raging over why the effects of the fire were so extensive and what should be done to prevent the recurrence of similar accidents at data centers that could bring massive damage to widely used online services.

On Monday, President Yoon Suk-yeol expressed concerns about possible emergency situations like a war when KakaoTalk, used by most Koreans, breaks down. Yoon’s remark illustrates potential risks of the tightly interconnected society run by a wide range of online services when things go wrong.

Some critics blame Kakao’s sprawling, interlocking online businesses after its rapid expansion into various sectors. With the dominant messenger KakaoTalk playing a central role, Kakao has introduced a slew of new services in a bid to lock in more users.

As a result, when the data center failed to operate due to the blaze over the weekend, almost all Kakao-affiliated services went down, amplifying the damage, except for Kakao Bank, which runs its own data center.

Kakao’s monopoly over diverse online business sectors, critics argue, should be curbed to minimize the chaotic impact from the so-called “digital blackout,” a side effect of a super-connected society.

The Kakao incident also highlights the longstanding issue with dominant platform companies. Last year, Kakao was under attack for relentlessly making inroads into business sectors in a way that hurt smaller enterprises. In response to the public criticism, Kakao promised to reduce its number of affiliates. But it trimmed just 10 affiliates out of more than 130, and went on to spin off its service business units to give huge rewards to its employees and investors, while failing to invest in basic infrastructure such as data centers and security.

Citing the Kakao incident, lawmakers from both ruling and opposition parties are now calling for stronger regulations for giant platforms in a bid to keep their expansion and monopoly at bay.

But the lawmakers themselves are partially responsible for the latest server outage. Back in May 2020, a bill was proposed to put data centers under the Basic Law on Disaster and Safety Management Act, but it was rejected by Judiciary and Legislation Committee, as lawmakers then sided with businesses that protested the government’s “over-regulation” of the private sector.

Opponents of state regulations claim that private firms like Kakao should be forced to pay strict commercial compensation for users when their services fail to operate properly, and the government should let the free market play its role. Indeed, shortly after Kakao’s server outage, some users opted for other services such as Telegram, reflecting their changed preferences.

Given that the boundary between private and public services is increasingly becoming blurred in an era of digital innovation, the government needs to work with lawmakers and experts to draw an optimal line in regulations for digital infrastructure in order to protect key online services that affect people’s everyday lives.