SK Comm. rejects data leak damages ruling
By Kim Yoo-chul
SK Communications, operator of the immensely-popular Cyworld (www.cyworld.com) social network website, is challenging a damage compensation awarded to one of its customers who sued the company over its lax protection of private data.
She is among many users of Cyworld and Nate (www.nate.com) , another SK Communications service, who have pursued legal action against the company after cyber criminals raided its servers in July last year and compromised the private information of millions of users.
SK Communications, the Internet business unit of SK Telecom, the country’s biggest mobile telephony operator, confirmed Friday that it will be appealing a decision by a court in Daegu to pay the customer 1 million won in damages.
``They have appealed to a higher court as expected. We are preparing the next round of court battles,’’ said Yoo Neung-jong, a lawyer who represents the user. Yoo is currently representing more than 1,000 Cyworld and Nate users seeking compensation from SK Communications.
Of course, the imaginary bill of 1 billion won in damage compensation is disturbing to SK Communications, which isn’t as profitable as it is influential after failing to create a meaningful business model despite Cyworld’s popularity.
Hackers stole the names, e-mail addresses, phone numbers and residential registration codes, the Korean equivalent of social security numbers, of more than 35 million Cyworld and Nate users in last year’s data breach.
Police are still investigating the case, and the company’s share prices dropped in recent weeks due to uncertainty over the potential legal costs.
The court decision in Daegu was shocking enough to SK Communications’ management that its new chief executive officer (CEO) Lee Joo-sik canceled a highly-anticipated news conference that was to be attended by both local and foreign media.
A new date for the event has yet to be announced.
``Imagine if SK Communications had to pay 1 million to every victim. That is 35 trillion won and the company will have to fold. Of course, that obviously won’t happen, but still, you have to believe that the company is apprehensive about the compensation issue,’’ said an industry executive.
SK Communications posted 262 billion won in revenue and 5.4 billion won net profit last year. Operating plummeted by 77.9 percent as it heavily invested in cyber security after the hacking scandal.
``Burdened by ongoing court issues, SK’s new businesses will delay for some more time. This is so bad for the company,’’ said Choi Kwan-soon, an analyst at SK Securities, adding the local brokerage cut its target on SK Communications to 10,500 won from a previous 20,000 won.