Marketing as compensation for damages?…Controversy arises from the start of Kakao outage compensation

[Asia Economy Reporter Yuri Choi] Kakao has begun compensating for service disruption damages caused by the fire at the Pangyo data center last October, but the compensation plan has been embroiled in controversy from the start. Some have criticized that part of the compensation plan is effectively being used as a marketing tool by automatically charging users a month later.

On the 5th, Kakao started the 'Mind Package' compensation for general users. It provides three free emoticons, a 5,000 KRW coupon for Kakao Makers, and a one-month 100-gigabyte (GB) subscription to Talk Storage Plus. Users can receive the compensation by accessing the dedicated Mind Package page.

This is the first time an online platform has compensated free service users for damages. However, there has been controversy over whether the compensation is actually encouraging users to subscribe to the service.

The Talk Storage Plus subscription is a prime example. Talk Storage Plus is a subscription service that stores KakaoTalk chat records, photos, videos, files, links, and contacts all in one place. After the free one-month period, the next month's payment is automatically charged. The one-month subscription costs 1,900 KRW. If users do not want to continue with the subscription, they must cancel the service before the payment date. Although this information is included in the notice, there are complaints that the compensation service is effectively being promoted like a marketing campaign.

There was also an issue of fairness as the compensation page opened about 15 minutes early the day before. Talk Storage Plus is provided to the first 3 million users on a first-come, first-served basis, and some users received it earlier than others.

In response, Kakao decided to exclude those who received the Talk Storage Plus subscription early from the first-come, first-served quota. They also explained that they will send notification messages one week before the subscription expires to prevent unwanted automatic payments.

Meanwhile, Kakao is also compensating small business owners. Those who suffered sales losses will receive cash compensation ranging from 30,000 to 50,000 KRW. If the damage is less than 300,000 KRW, 30,000 KRW will be provided; if it is between 300,000 KRW and less than 500,000 KRW, 50,000 KRW will be given. For those with damages exceeding 500,000 KRW, compensation will be determined after a damage verification process.