Korean tech companies facing heavy regulation since Kakao server crash

Brian Kim, head of Kakao's Future Initiative Center, apologizes for Kakao's October service crash at the National Assembly on Oct. 24. [NEWS1]

Kakao has become a popular target for regulation among lawmakers after a 127-hour service meltdown last year ignited public concerns over the overwhelming market dominance of a handful of tech companies.

Regulations are drafted under the pretext of goodwill, but some people are raising eyebrows about their practicality.

Democratic Party (DP) Rep. Kim Jung-ho and ten other lawmakers in the party on Feb. 22 proposed a bill that allows people to leave group chats without leaving a notification in the chatroom.

The lawmakers wrote in their proposal that the purpose of the bill is to address the inconvenience of people who are unwantedly included in group chats and have to notify others when exiting the chatroom. Group chat service providers who do not remove the function are fined 20 million won ($15,000).

Another group of lawmakers led by DP Rep. Ko Min-jung proposed a bill in December to have internet portal operators submit their rates and terms and conditions to the government. Companies that change their rates policy and do not report on the change are fined 10 million won.

Kakao is one major tech company subject to both bills proposed to the National Assembly’s science and communications committee. Kim’s bill targets mobile messengers like Kakao’s messenger KakaoTalk that automatically leave a message in the group chatroom when someone exits the chat. Ko’s bill in principle regulates unfair practices of information technology (IT) companies.

A board member of an IT company who spoke on condition of anonymity said the decision to add or remove certain technical functions should be at the company’s discretion, not parliament.

In reviewing Ko’s bill, the National Assembly’s science committee said although it agrees with the bill’s purpose, imposing on IT service operators with the same regulations as telecommunication companies that have relatively stronger public functions goes too far. The committee also said it can be a violation of trade agreements if the government meddles with foreign company policies too much and will be unfair for local companies if only they are regulated.

Such concerns were frequently brought up whenever the government tried to regulate IT service operators. When Kim proposed a bill in 2021 that requires chat service operators to ask for the user consent when being included in a group chatroom, the committee rejected the bill for excessive infringement of business and disbelief in its practicality.

When many of Kakao’s services crashed after a fire broke out in its data center in October last year, lawmakers raised the importance of data centers.

Rep. Park Sang-hyuk proposed a bill in January regulating the construction of new data centers. It requires companies to simply “collect public opinion” because people may feel “uneasy” about the electromagnetic waves emitted from the center. The proposal did not stipulate any scientific evidence for the harmful effects of the data center, tossing the debate to be resolved by the public.

“It would be good to have clear reasons and standards,” said a public official of a city in Gyeonggi who is in charge of the construction approval process.

BY SHIM SEO-HYUN, SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]