Estimated Over 100,000 Cases of Damage, Various Types
Filtering Simple Complaints and Grievances, Actual Damage Verification Underway
Consultation Body Formed with Associations Including Small Business Federation, Discussing Damage Compensation
On the 20th, as Kakao entered an emergency management system following a data center fire incident and the resignation of CEO Namgung Hoon, employees were arriving at the lobby of Kakao Ajit in Seongnam, Gyeonggi Province. Photo by Kang Jin-hyung, Seongnam aymsdream@
[Asia Economy Reporter Seungjin Lee] Kakao is set to officially begin discussions on compensation for damages caused by the ‘service outage’ resulting from a data center fire. Internally, Kakao has formed an emergency response committee and plans to establish a consultative body with external organizations to develop specific compensation criteria. However, with over 100,000 reported damage cases already known, it is expected to take a considerable amount of time to complete the compensation process.
Estimated Damage Cases Exceed 100,000
According to industry sources on the 14th, the emergency response committee led by Kakao CEO Eun-taek Hong is currently classifying the reported damage claims by type and compiling the data. Kakao has been accepting damage reports for both free and paid services from the 19th of last month until the 6th of this month. Within just five days of opening the reporting, about 45,000 cases were received, suggesting that over 100,000 cases were likely reported during the entire 19-day period.
Kakao is currently filtering out posts that are simple complaints or grievances that are difficult to consider as actual damage cases. Disclosure of specific cases and numbers, as well as discussions on compensation plans by case type, are expected to be possible only after this filtering stage is completed.
A Kakao representative stated, "Discussions on forming a consultative body with various organizations, including the Federation of Small and Medium Business, are in the final stages," adding, "Once the consultative body is established soon, we will organize the types and scope of damages and jointly discuss compensation and other follow-up measures."
No Compensation Regulations or Precedents... A Daunting Task
The discussions on compensation are expected to take a significant amount of time. This is due to the sheer volume of reported cases and the absence of compensation regulations or precedents for free services. Additionally, verifying whether the damages claimed by reporters actually occurred will pose considerable challenges. If reporters fail to submit supporting evidence, legal compensation will not be easy.
Compensation criteria must also be established for damages that are difficult to quantify in concrete figures. Setting standards on how far to compensate for property damage versus emotional distress is a key issue. Compensation for potential future earnings lost due to the service outage must also be discussed.
The agreement reached last month between Kakao Mobility and the National Chauffeur Labor Union through collective bargaining could serve as a precedent for upcoming discussions. Kakao Mobility and the Chauffeur Union agreed that rather than compensating for expected earnings lost during the outage, it is more practical to provide support and benefits for future operations.
Kakao plans to form a consultative body with various organizations, including the Federation of Small and Medium Business, to organize the types and scope of damages and discuss compensation and follow-up measures. Similar to the chauffeur union case, it is likely to focus on providing support and benefits rather than uniform compensation for expected earnings.
Currently, Kakao has made initial compensation payments for paid services. Users of services such as Melon and Kakao Webtoon received compensation in the form of extended expiration dates for their usage rights. Kakao Games users were given in-game currency. The estimated compensation amount for paid service users so far is around 40 billion KRW.
KT Ahyeon Station Fire Compensation Took One Year
Industry experts predict that it will take at least several months for Kakao to prepare a compensation plan. Some expect that completing the compensation process could take over a year.
Following the KT Ahyeon Station fire in November 2018, compensation standards and support funds for about 13,000 small business owners in parts of Seoul were finalized three to four months after the incident, and the compensation process was concluded 333 days after the accident.
Meanwhile, Kakao is currently operating its emergency response committee through three subcommittees: the Cause Investigation Subcommittee, the Recurrence Prevention Measures Subcommittee, and the Compensation Review Subcommittee. The investigation into the cause of the outage has been entrusted to Lee Hwak-young, CEO of Grep and an external technical expert. Over the past two weeks, they have conducted a thorough investigation covering the entire process from the service outage cause to recovery.
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