South Korea’s Kakao Super App Outage Shows Risks of Living a ‘Digital Only’ Life

Technology makes everything easier.

Except when it doesn’t work — and then makes everything harder.

And if there is any indication that a “digital first” but not “digital only” mindset might be an optimal one, even in the post-pandemic world, one need no farther than the recent events surrounding Kakao, the South Korean super app.

That app — which offers the proverbial digital front door to a range of services and offerings, from messaging and social media to payments and ride-hailing — went dark over the weekend.

For several hours. And that was enough to throw South Koreans’ daily lives — or at least the 47.5 million users, which represents just about 90% of the country’s population — into chaos.

Now, the circumstances surrounding the outage are what might be termed unfortunate, unforeseen and fortunately (according to the reports), no one was hurt. A fire at the company’s data centers outside of Seoul interrupted services, which has since been restored.

But the impact has been far-reaching and may, we note, even alter the structure of the company itself — and perhaps spur some discussion of the digital-only construct of some super apps in general. Consumers, who had embraced everything from the messaging function KakaoTalk to mobile banking, expressed outrage that the essential flows of daily activities were interrupted. Chatting is one thing. Paying bills is, of course, entirely something else.

As to the ripple effects, on Wednesday, Kakao’s co-CEO Whon Namkoong resigned, as reported by the Financial Times, and even President Yoon Suk-yeol has weighed in. In comments relayed by the FT, he said that regulators would be examining the company’s market dominance.

“Although the network is run by a private company, it’s practically national communications infrastructure,” President Yoon said, per the FT. “If a monopoly or an oligopoly causes market distortions and acts like national infrastructure, I think the government should take action.”

Beyond the scrutiny and the impact to the company’s share price (it’s down about 70% since July, in tandem with a general downdraft that has hobbled all manner of platforms and FinTechs), herein lie the perils of a “digital only” life, as opposed to a “digital first” existence.

The difference may be one that helps ensure that daily tasks and transactions can continue even when the digital front door slams shut. A digital-first approach is one that makes in-person, brick-and-mortar interactions as digital as might be possible, but also reserves at least some wiggle room (our term) to have services readily available in the event that messaging and platforms go dark.

Banks are the most obvious example of being able to leverage a digital “first” vs. “only” approach, where branch settings may not go entirely away; call centers and tellers are conduits to making sure money (even tangible bills and coins) are accessible.

Kakao’s challenges come at a time when, as PYMNTS’ research has found — with insight from 9,000 individuals in Australia, Germany, the U.K. and the U.S. — 72% of consumers are at least “slightly” interested in a super app, and 25% are “very” or “extremely” interested. The discussions of what super apps are, could be, or should be, will only get more intense in the wake of Kakao’s outage.

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