Baek Byung-yeul is a journalist at The Korea Times focused on cultural content, including films and cultural events in South Korea. You can contact him at baekby@koreatimes.co.kr to share your insights.
Kakao founder slammed for evading responsibility over service outage
Kakao founder Kim Beom-su / Courtesy of Kakao
By Baek Byung-yeul
Experts urge Kim to come to forefront of management
By Baek Byung-yeul
Kakao founder Kim Beom-su's leadership has come under fire due to the recent service outage after a data center fire.
Industry experts said Thursday that the incident revealed that Kakao had focused only on expanding its business, but had been negligent in operating its services stably without establishing a proper control tower to oversee its operations.
They added that Kim, who's currently serving as a chief of the company's Future Initiative Center, needs to take the chief executive or chair of the board position as part of his effort to show more responsibility as a major shareholder of the internet giant.
“The service outage obviously showed that Kakao has failed to manage risks effectively. The company has ventured into various businesses based on the dominance of its platform, but it turned out that Kakao neglected the safety of its most important business,” an official in the IT industry said on condition of anonymity.
Kim Dae-jong, a professor in the School of Business at Sejong University, said it is time for the founder to come to the forefront of the management as part of the company's efforts to seek a breakthrough at the impasse.
“The Kakao Group has listed four companies ― Kakao, Kakao Pay, Kakao Bank and Kakao Games ― on the stock market. The group also tried to list Lionheart Studio, one of its game-making affiliates, but scrapped the plan last week due to a decrease in its market value,” he said.
“Kakao's company value fell more and more as it forcibly spun off its subsidiaries and listed them on the stock market. In order to show more responsibility to shareholders, Kim should take the helm of the board of directors or become CEO to gain the trust of its service users and shareholders,” Kim added.
On Oct. 15, a fire occurred at a data center of SK C&C in Pangyo, Seongnam, which houses Kakao's service, and caused massive disruptions of various Kakao's services, including its mobile messenger service, KakaoTalk.
Taking responsibility for the accident, Namkoong Whon, co-CEO of Kakao, resigned on Wednesday while the other co-CEO, Hong Eun-taek, will remain as the sole leader of the company.
Other than spinning off its subsidiaries, the company also has been criticized for a series of issues, such as abusing its dominant market position to encroach upon the territory of small mom-and-pop businesses and the actions of executives of its subsidiaries, who sold off their stocks right after listing them on the stock market.
In response to the call that founder Kim needs to come back to the front line to solve the crisis, Hong, the sole CEO of Kakao, said during a press conference on Wednesday that “at a time when the founder has not been engaged in the management, it is not proper for Kim to selectively intervene as needed. Kim's stance will be heard at the National Assembly audit on Oct. 24.”
Shares of Kakao affiliates fell again Thursday in the aftermath of the service outage. Shares of Kakao was closed at 47,750 won, down 4.12 percent from a day ago, while Kakao Pay, KakaoBank and Kakao Games fell 5.01 percent, 3.16 percent and 2.62 percent, from a day ago, respectively.