Kakao Service 'Outage Crisis' Sparks Regulatory Pressure from Ministries and National Assembly
Naver Gains Indirect Benefits, but Kakao Faces Dilemma as Regulatory Atmosphere Turns One-Sided
[Asia Economy Reporter Kang Nahum] Following the 'blackout incident' of Kakao services caused by the fire at SK C&C's Pangyo data center, regulatory pressure from various government ministries and the National Assembly on platform companies is intensifying. Naver, which had enjoyed some benefits in certain services due to this incident, is now once again tied to Kakao as a 'shared destiny community' and has become a regulatory target, placing it in a complicated situation where it neither can cry nor laugh.
According to industry and political sources on the 19th, the Ministry of Science and ICT is considering reintroducing the amendment to the Basic Act on Broadcasting and Communications Development, which failed to pass the National Assembly two years ago, in light of the recent Kakao service blackout incident. The core of the bill is to include private data centers in the 'National Disaster Management Facility Basic Plan' for management purposes to prevent data loss or leakage in the event of a national disaster.
The government had previously pushed for legislation in 2020 to prevent data loss or leakage during national disasters, but the bill failed to pass the National Assembly amid controversies over excessive regulation of value-added telecommunications service providers and infringement of property rights.
The National Assembly is also producing similar regulatory bills. Democratic Party lawmaker Cho Seung-rae proposed an amendment to the Basic Act on Broadcasting and Communications Development to include value-added telecommunications service providers like Kakao and data center operators like SK C&C in the national disaster management system. Another Democratic Party lawmaker, Byun Jae-il, introduced a partial amendment to the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc., which includes businesses that lease data centers, like Kakao, as subjects obligated to implement data center protection measures.
The Fair Trade Commission (FTC) has also decided to prepare regulatory measures regarding the monopolistic structure of the platform market. In this regard, it is creating specific review guidelines for online platforms such as Kakao. Since online platforms tend to solidify monopolistic structures once they initially dominate the market, and it is difficult to judge monopoly status based on price or production volume, the FTC plans to specifically define prohibited acts that platforms must not engage in.
Separately, the FTC has been investigating Kakao Mobility on allegations of preferentially directing passengers to affiliated taxis and is preparing sanctions. It is also reviewing whether there were any issues with the terms of use of services provided by Kakao in light of the recent fire incident.
These regulatory movements have left Naver in a complicated position. Although Naver's services such as the Naver messenger app Line and Naver Maps benefited indirectly from Kakao's blackout incident, the fact that many of its businesses overlap with Kakao means it inevitably becomes a regulatory target.
Naver, which minimized customer damage through a swift response during the recent data center fire, finds itself in a somewhat unfair situation. Although some services, including the live commerce service 'Shopping Live' and 'Receipt Review,' experienced disruptions immediately after the fire, Naver restored them within three hours. This was possible because of thorough risk management, such as operating data centers in a dualized manner.
In particular, if the amendment to the Basic Act on Broadcasting and Communications Development promoted by the government passes, Naver, which owns its own data center 'Gak' in Chuncheon, Gangwon Province, will inevitably become a direct regulatory target. According to the amendment, if a disaster or service disruption occurs at a data center, the operator must submit a related report to the government, and failure to comply may result in fines or penalties proportional to sales. Additionally, the government must be allowed to conduct on-site inspections if necessary.
An industry official said, "Although Naver has managed risks better than Kakao so far, it is now being lumped together and targeted for regulation. With growth already showing signs of slowing due to factors like the economic downturn, adding regulations may further stifle growth," expressing concern.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
