Ubiquitous South Korea App Goes Offline, Raising Fresh Concerns Over Tech Giants

Local media referred to the service disruption as the “Kakao Blackout.” With Kakao servers knocked offline, taxi drivers couldn’t connect with potential passengers via Kakao’s ride-hailing app. People renting Kakao-operated electric scooters and bikes couldn’t end their rides due to errors in the apps, triggering bills of as much as 500,000 won, or the equivalent of $350. South Koreans reported issues transferring money or sending e-coupons through the KakaoTalk messenger.

Most of South Korea’s 52 million residents use Kakao, with the company’s integral role in arranging essential services, like Covid-19 vaccines, having only deepened during the pandemic.

The idea of an everything app has gained more attention lately, following Elon Musk’s interest in potentially building a social-media company that would offer a variety of services. A purchase of Twitter Inc., Mr. Musk has previously indicated, could accelerate such endeavors for a do-it-all app.

The Kakao service breakdown drew quick attention from South Korean officials. On Monday, President Yoon Suk-yeol likened Kakao’s services to a national infrastructure and asked the country’s antitrust regulators to more deeply explore potential issues that come with a monopolized market. Lawmakers proposed adding companies like Kakao that operate critical online services and data centers to the national disaster-response system to ensure faster recovery and responses to potential service disruptions.

The incident served as a grave reminder that disruptions to communication apps, like Kakao, now “go beyond creating mere user conveniences to paralyzing economic, social activities,” said Lee Jong-ho, South Korea’s minister of science and ICT.

Kakao said Monday that most of its major services had resumed normal operations, but that certain services such as email and its Daum search engine were still experiencing delays in normalization due to system complexities. It had earlier apologized, vowed steps to recover service and prepare compensation plans for related parties.

South Korea boasts some of the world’s fastest internet speeds and highest rates of smartphone adoption. That technological savvy has meant a comparatively large slice of the country’s communications and commerce have shifted online, leaving it particularly vulnerable should one of the main digital corridors go down.

A big reason for Kakao’s deep digital roots across South Korea is how often the country requires government-identity verification for a variety of routine tasks, from checking out a book at the library to ordering food online. The Kakao messaging app tethers to an individual’s smartphone number, which must be connected to a person’s government-issued identification, making the app a convenient way to access many services, said Park Kyung-sin, director at Open Net Korea, a nonprofit advocating for digital rights.

“Kakao has become the go-to tool for identity verification,” said Mr. Park, who is also a law professor at Korea University in Seoul. The solution, he added, would be for South Korea to reduce the number of essential services requiring such identity verification.

Temporary interruptions of social media platforms, cloud companies, messaging apps and various websites are relatively common in the U.S. and elsewhere, but few such services are as central to users’ lives as Kakao is in South Korea.

Meta Platforms, Inc.’s services went offline for as much as six hours last year, disrupting access for businesses and users around the world. Its core platforms and apps including WhatsApp, Instagram and Facebook Messenger were affected by what Facebook called networking issues.

Amazon.com Inc.’s cloud-computing unit, Amazon Web Services, suffered several outages in December, creating disruptions at the likes of U.S. cryptocurrency and video streaming firms that use its cloud infrastructure. AWS is the U.S. biggest cloud-computing provider, allowing firms to rent computing, storage and network capabilities. Meanwhile, messaging platform Slack and fitness equipment company Peloton Interactive Inc. suffered glitches in February.

Shares of Kakao fell by as much as 9.5% on Monday morning, before closing at a drop of 5.9%. Investors sold off other main Kakao affiliates, including KakaoBank Corp., Kakao Games Corp. and Kakaopay Corp.

Many third-party South Korean apps, which allow users to log in using their KakaoTalk messenger information instead of creating a separate account, also saw disruptions.

Among the affected was Oilnow, an app that lets users find the cheapest gas stations in their area, as well as shop for other items for the car. The company uses Kakao’s mobile map service and most of its roughly 400,000 monthly active users log on to Oilnow with Kakao’s sign-in process, said Hyunwoo Roh, CEO of Puzzles Ventures Co., which operates Oilnow.

Kakao’s handling of the situation was surprisingly disappointing, he added. “We received a barrage of complaints,” Mr. Roh said.

Kakao was founded in 2010, building a mass audience in South Korea as the smartphone era brought major shifts to messaging and gaming. Kakao’s empire in recent years expanded into ride-hailing services, digital comics, internet banking, maps—and during the pandemic, became an essential platform where individuals could book appointments, reservations for Covid-19 vaccines, health checkups and more.

Kakao currently has servers in four data centers—all of which are operated by external partners—with the highest proportion of servers based in the facility located in the South Korean city of Pangyo and operated by the information-technology services arm of SK Inc. The Pangyo facility is where the fire took place over the weekend.

Naver Corp., South Korea’s largest internet company by market capitalization, also had servers located at the data-server center in Pangyo. But its services have been normalized as of Monday, in part due to some of its data servers being controlled in-house.

The recent disruptions have raised criticisms by mobile app firms, lawmakers, civic groups and users that Kakao failed to make sufficient investments in data-centers and should be held to responsibilities akin to telecommunication providers.

Kakao is slated to open two new data centers of its own in South Korea, one by next year and another expected by 2026, a company spokeswoman said.

—Newley Purnell in Hong Kong contributed to this article.

Write to Jiyoung Sohn at [email protected] and Timothy W. Martin at [email protected]

Local media referred to the service disruption as the “Kakao Blackout.” With Kakao servers knocked offline, taxi drivers couldn’t connect with potential passengers via Kakao’s ride-hailing app. People renting Kakao-operated electric scooters and bikes couldn’t end their rides due to errors in the apps, triggering bills of as much as 500,000 won, or the equivalent of $350. South Koreans reported issues transferring money or sending e-coupons through the KakaoTalk messenger.

Most of South Korea’s 52 million residents use Kakao, with the company’s integral role in arranging essential services, like Covid-19 vaccines, having only deepened during the pandemic.

The idea of an everything app has gained more attention lately, following Elon Musk’s interest in potentially building a social-media company that would offer a variety of services. A purchase of Twitter Inc., Mr. Musk has previously indicated, could accelerate such endeavors for a do-it-all app.

The Kakao service breakdown drew quick attention from South Korean officials. On Monday, President Yoon Suk-yeol likened Kakao’s services to a national infrastructure and asked the country’s antitrust regulators to more deeply explore potential issues that come with a monopolized market. Lawmakers proposed adding companies like Kakao that operate critical online services and data centers to the national disaster-response system to ensure faster recovery and responses to potential service disruptions.

The incident served as a grave reminder that disruptions to communication apps, like Kakao, now “go beyond creating mere user conveniences to paralyzing economic, social activities,” said Lee Jong-ho, South Korea’s minister of science and ICT.

Kakao said Monday that most of its major services had resumed normal operations, but that certain services such as email and its Daum search engine were still experiencing delays in normalization due to system complexities. It had earlier apologized, vowed steps to recover service and prepare compensation plans for related parties.

South Korea boasts some of the world’s fastest internet speeds and highest rates of smartphone adoption. That technological savvy has meant a comparatively large slice of the country’s communications and commerce have shifted online, leaving it particularly vulnerable should one of the main digital corridors go down.

A big reason for Kakao’s deep digital roots across South Korea is how often the country requires government-identity verification for a variety of routine tasks, from checking out a book at the library to ordering food online. The Kakao messaging app tethers to an individual’s smartphone number, which must be connected to a person’s government-issued identification, making the app a convenient way to access many services, said Park Kyung-sin, director at Open Net Korea, a nonprofit advocating for digital rights.

“Kakao has become the go-to tool for identity verification,” said Mr. Park, who is also a law professor at Korea University in Seoul. The solution, he added, would be for South Korea to reduce the number of essential services requiring such identity verification.

Temporary interruptions of social media platforms, cloud companies, messaging apps and various websites are relatively common in the U.S. and elsewhere, but few such services are as central to users’ lives as Kakao is in South Korea.

Meta Platforms, Inc.’s services went offline for as much as six hours last year, disrupting access for businesses and users around the world. Its core platforms and apps including WhatsApp, Instagram and Facebook Messenger were affected by what Facebook called networking issues.

Amazon.com Inc.’s cloud-computing unit, Amazon Web Services, suffered several outages in December, creating disruptions at the likes of U.S. cryptocurrency and video streaming firms that use its cloud infrastructure. AWS is the U.S. biggest cloud-computing provider, allowing firms to rent computing, storage and network capabilities. Meanwhile, messaging platform Slack and fitness equipment company Peloton Interactive Inc. suffered glitches in February.

Shares of Kakao fell by as much as 9.5% on Monday morning, before closing at a drop of 5.9%. Investors sold off other main Kakao affiliates, including KakaoBank Corp., Kakao Games Corp. and Kakaopay Corp.

Many third-party South Korean apps, which allow users to log in using their KakaoTalk messenger information instead of creating a separate account, also saw disruptions.

Among the affected was Oilnow, an app that lets users find the cheapest gas stations in their area, as well as shop for other items for the car. The company uses Kakao’s mobile map service and most of its roughly 400,000 monthly active users log on to Oilnow with Kakao’s sign-in process, said Hyunwoo Roh, CEO of Puzzles Ventures Co., which operates Oilnow.

Kakao’s handling of the situation was surprisingly disappointing, he added. “We received a barrage of complaints,” Mr. Roh said.

Kakao was founded in 2010, building a mass audience in South Korea as the smartphone era brought major shifts to messaging and gaming. Kakao’s empire in recent years expanded into ride-hailing services, digital comics, internet banking, maps—and during the pandemic, became an essential platform where individuals could book appointments, reservations for Covid-19 vaccines, health checkups and more.

Kakao currently has servers in four data centers—all of which are operated by external partners—with the highest proportion of servers based in the facility located in the South Korean city of Pangyo and operated by the information-technology services arm of SK Inc. The Pangyo facility is where the fire took place over the weekend.

Naver Corp., South Korea’s largest internet company by market capitalization, also had servers located at the data-server center in Pangyo. But its services have been normalized as of Monday, in part due to some of its data servers being controlled in-house.

The recent disruptions have raised criticisms by mobile app firms, lawmakers, civic groups and users that Kakao failed to make sufficient investments in data-centers and should be held to responsibilities akin to telecommunication providers.

Kakao is slated to open two new data centers of its own in South Korea, one by next year and another expected by 2026, a company spokeswoman said.

—Newley Purnell in Hong Kong contributed to this article.

Write to Jiyoung Sohn at [email protected] and Timothy W. Martin at [email protected]