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| The headquarters of Kakao in the Pangyo area of Seongnam, Gyeonggi Province / Korea Times fie |
By Lee Kyung-min
KakaoTalk, the most widely used messenger app in Korea, generated about 2.6 trillion won ($1.8 billion) in sales from advertisements over the past 18 months, at the expense of corporate expenditure to fortify system operations and stability, a ruling party lawmaker said.
Insufficient preventative measures amplified the service outage at an SK C&C data center in Seongnam, Gyeonggi Province, Saturday, according to Rep. Kang Min-kuk of the ruling People Power Party.
The fire led to the electrical shutdown of Kakao's servers. The ensuing server outage lasted for over 10 hours, causing disruptions to the entire 134 services available on the platform.
According to data submitted to the lawmaker, who is a member of the National Assembly's National Policy Committee, KakaoTalk advertisements netted Kakao 2.55 trillion won from January last year to June this year.
The strong sales were driven by a marketing tool, KakaoTalk for Biz, available to sellers enabling them to place promotional banners for their products at the top of the KakaoTalk application screen.
Among the 9,015 sellers using the scheme were those in the businesses of food and beverage, fashion, finance, games, construction and real estate.
Sales generated through KakaoTalk for Biz amounted to 1.64 trillion won last year, and 914.1 billion won was logged in the first two quarters of this year. This year's sales figures are expected to well exceed that of last year.
Kang said commerce in the country is almost exclusively mediated by Kakao, a profit seeker that has long thrived without any spending on strengthening system stability.
"The recent fiasco occurred, because Kakao only cared about making money and couldn't be bothered to give any thought to system operations," he said.
Short-term gains were the only concern for Kakao, capitalizing on KakaoTalk users essentially being locked in to using the messenger app adopted by almost everyone in the country.
"The market share of KakaoTalk is overwhelming, and Kakao knows it. The Fair Trade Commission and the Ministry of Science and ICT should outline standards for stricter rules for the country's largest and the most influential platform operator to keep its capital-backed greed in check," he added.
The antitrust agency said Tuesday that it is fine-tuning the specifics of a regulation whereby online platform operators will be penalized for abusing their market dominance.
The announcement came on the heels of President Yoon Suk-yeol's comment a day earlier. He told reporters that the government should map out response measures to reorient the market heavily distorted by monopolistic or oligopolistic practices, especially when the public almost exclusively relies on the infrastructure formed by a single player.
