A belated apology from Kakao

Kakao CEO Namkoong Whon resigned after apologizing over the meltdown of broad range of platform services based on dominant chat app Kakao Talk. Namkoong who oversaw Kakao services and businesses admitted that data redundancy had not been sufficient, causing the delay in normalization of the service after an outage at one of its key data centers in Gyeonggi due to a fire on Saturday.

The company had to reboot 3,200 servers manually. Co-CEO Hong Eun-taek who will remain as the sole chief executive apologized for neglecting the “fundamentals” and for frustrating the people despite the service’s “public role,” as most Koreans use the platform.

The latest disaster underlined that the company had been entirely busy enlarging its business but neglecting the fundamentals of dualizing data centers for security as an IT company. It may have grown arrogant from its predominance of the market. President Yoon Suk-yeol pointed out that the Kakao incident should be studied at it relates to platform monopoly and national security issues. Both the People Power Party and opposition parties are hastening with bills to strengthen regulations.

Data centers that power platform behemoths like Kakao must be regarded as national infrastructure. A bipartisan study and legislation are needed to advance the Telecommunications Act. They must confer with experts to avoid over-regulation. Like the ban on Tada van-hailing service, a controversial event often leads to excess regulation.

The Fair Trade Commission (FTC) intervenes when monopolistic practices hamper with fair competition and damage consumers. Predominance itself should not be an issue. Google is a dominant platform operator, but it does not cause mishaps like Kakao. The FTC must only look into whether there had been abuse of power through the use of dominant position and whether arbitrary mergers can lead to such danger. The European Union has Digital Markets Act aimed at regulating Meta messenger WhatsApp which has come to control the messaging market in Europe by requiring dominant platforms to “open up and interoperate with smaller messaging platforms.”

The Korean version aimed to ensure fair trade by online platforms that had been pursued under the past administration has come under the spotlight. Overbearing ways of platform giants should be regulated. Although the Yoon Suk-yeol government has favored industry-led containment, the mood is tilting toward regulation.

Platform businesses can be innovating and at the same time bears the risk of monopoly. Although unfair practices must be regulated, innovations must not be hampered. A balanced solution must be found to promote platform services in a sustainable and innovative direction.