KakaoTalk has recovered since October server-farm debacle

Kakao has almost recovered from a server-farm outage that took most of its major offerings offline for a few days in October. Use of KakaoTalk is almost back to where it was a year ago, according to MobileIndex. On Dec. 9, the average ...

An image of KakaoTalk messenger app [YONHAP]

Kakao has almost recovered from a server-farm outage that took most of its major offerings offline for a few days in October.

Use of KakaoTalk is almost back to where it was a year ago, according to MobileIndex.

On Dec. 9, the average daily per person use of the service was 32.25 minutes, down 3.3 percent on year, and up slightly from the 32.17 minutes on Oct. 14, the day before the incident.

Active daily users totaled 35.0 million on Dec. 9, down from 37.0 million a year earlier and unchanged from the day before the incident.

The Kakao T taxi-hailing app was used 2.97 minutes on average on Dec. 9, down from 5.22 minutes a year earlier. For Kakao Map, it was 8.35 minutes, down from 10.35 minutes.

On Oct. 15, Kakao servers were knocked out as a result of a battery fire at an SK C&C data center in Pangyo, Gyeonggi. Messenger, banking, transportation, payment and e-commerce services were unavailable, degraded or intermittent for about 127 hours as backup systems failed to kick in fast enough.

The company has said that while it had a backup system in place, the recovery process could not be properly implemented due to a flaw in the design of the control mechanism.

One of Kakao's two CEOs resigned and the company promised compensation.

Kakao will triple its budget for service stabilization over the next five years to get its systems up to industry standard, the company said last Wednesday.

The company's shares have been rising since collapsing right after the collapse of its systems.

They closed at 58,200 won ($44.6) on Tuesday, up 0.2 percent from the previous day and up 20.4 percent from 48,350 won on Monday, Oct. 17, the first trading day after the server-farm debacle.

Kakao Pay closed at 68,200 won on Tuesday, 97.1 percent higher than the 34,600 won on Oct. 17, and Kakao Bank was 29,000 won, up 74.7 percent from Oct. 17. Kakao Games rose 16 percent compared to the October fiasco.

On year, Kakao shares are down 51.5 percent, Kakao Pay down 64.1 percent, Kakao Bank down 54.3 percent and Kakao Games down 51.8 percent.

The company still has to pay about 40 trillion won in compensation, much of which will be reflected in fourth-quarter and full-year earnings.

“Kakao is expected to suffer from a decrease in short-term profit growth and investor sentiment due to the KakaoTalk freeze and worsening market conditions,” said Oh Dong-hwan, senior analyst at Samsung Securities.

“It may see profit grow in 2023 by restructuring KakaoTalk. A slow recovery into 2023 is expected.”

BY YOON SO-YEON [yoon.soyeon@joongang.co.kr]