Shares of South Korea's Kakao Corp plunged on Monday after a widespread outage in the country's largest mobile chat app triggered a sharp political backlash and calls for increased scrutiny on the company's market dominance.
On Monday, rival messaging service LINE zoomed to the top of iPhone App Store's most downloaded apps in South Korea, having not even ranked in the top 100 on Friday, according to SensorTower data. KakaoTalk fell to 36th from 13th.
"Basically it's a free service and how compensations will work for paid services is ambiguous, but it's being seen as a national communication network, not a private one," said Choi Yoo-june, analyst at Shinhan Financial Corp. "Parliament audits are ongoing right now, and it's likely to spread to the issue of platform monopoly regulation."
The free messenger service took mobile users by storm soon after smartphones took off in late 2000s and its early mover advantage allowed it to outpace competitors, including tech giant Naver, to become South Korea's dominant messenger. "Assuming that the damage compensation range is limited to paying users, the effect on operating profit is estimated to be about 12 billion won," said Kim Jin-woo, analyst at Daol Investment & Securities. "What is important would be user traffic trends after full service recovery."It said on Monday it would discuss compensation with data centre operator SK C&C for losses it and its key units have sustained.
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