[Chorus] How was everyone on the weekend when KakaoTalk was busy?

Dozens or hundreds of Kakao Talks come in every day, call a Kakao taxi to go see a friend, and use Kakao Map to use public transportation.

It is a very familiar everyday life.

But last weekend, it all stopped.

It took a considerable amount of time to fix the accident, and on the 19th (Thursday), there was an apology from the Kakao representatives, taking responsibility for this incident.

Today's Mabu News is going to talk about a platform company that was stopped by a data center fire.

In the last <What is the Butterfly Effect of YouTube I See?> letter, I looked at how data centers affect the environment. In today's letter, I prepared a story about data centers and platform economy.

This is the question Mabu News asks its subscribers today.

32,000 servers are down

Let's start with the case.

On October 15th, last Saturday around 3pm, a fire broke out in the electrical room on the 3rd basement floor of the SK C&C data center in Pangyo.

As the power supply was cut off, all services in the data center were down.

At first, it was thought that the fire occurred in the uninterruptible power supply, but after analyzing CCTV data and forensics, it is believed that a spark occurred in the battery of the electrical room.

When the power of the data center went out, KakaoTalk errors started to occur.

The message was not sent properly and there was also an error that prevented me from logging in.

It must be around this time that your readers' KakaoTalk stopped.

It wasn't just KakaoTalk.

Next, most of the Kakao-based services had errors.

Kakao services used in our lives, such as Kakao Pay, Kakao Taxi, Kakao Map, and Kakao T, have literally ceased to exist.

However, it was not only Kakao that moved into the data center.

Naver was also using the SK C&C data center.

Naver also experienced errors such as Naver Shopping and News as the servers in its data center went out.

However, unlike Kakao, most of Naver returned to normal within 4 hours on the day of the accident.

Kakao is receiving a lot of criticism as the two major platform companies in Korea experienced the same accident and produced opposite results.

Enlarging an image

When I looked at overseas server-related sites, it was said that the damage caused by Kakao was the largest among the data center accidents ever recorded.

DCIRN (Data Center Incident Reporting Network) identified a total of 31 data center accidents for 18 years from 2003 to 2021, and it is believed that the largest damage was caused by the fire accident of OVH cloud in March 2021.

OVH cloud is Europe's largest cloud computing company, and last year's fire damaged 30,000 servers.

However, the server damage that Kakao revealed this time is 32,000 units, which is more than that.

The problem with data center incidents is that the shockwave extends to other businesses and consumers tied to the platform as well.

25 servers for the game <Rust> were down due to the OVH cloud accident, and game data was permanently lost.

Of course, recovery was impossible.

In 2012, a fire broke out at the headquarters of Shaw Communications, a Canadian telecommunications company, and the server that operates medical insurance and medical information was damaged and the hospital system was shut down.

Even in this Kakao incident, taxi drivers and small business owners who used Kakao services suffered direct sales damage.

Kakao said the fire was difficult to predict

Enlarging an image

"The fire was such an unpredictable accident, so I guess I wasn't prepared enough for that part."

Kakao admitted at a press conference that the data center was not well prepared for fire.

Still, he caused controversy by saying that 'a fire is an accident that is difficult to predict'.

Data security experts point out that Kakao lacks expertise in data center operation.

In fact, many fire accidents occur in data centers.

Right now, all the incidents that Mabu News mentioned above as examples are fire accidents.

Let's take a closer look at the data to be sure.

First of all, if you look at the data center incident data of DCIRN mentioned above, out of 31 incidents in the past 18 years, a total of 20 accidents occurred.

Fires occurred in 64.5% of data center accidents, or more than half.

Enlarging an image

This time, let's take a look at the data from the Uptime Institute.

Uptime Institute is an organization that has set standards for classifying data centers around the world, and it boasts the highest public confidence on the data center side.

According to the Uptime Institute's analysis of the causes of data center outages, battery problems are the number one cause of all accidents.

The battery is the cause in 29% of cases.

3 out of 10 accidents are battery problems.

Even in this Kakao incident, the vice president's remarks that it was difficult to predict a fire accident because the spark from the battery was connected to a fire does not readily make sense.

The government says that corporate data centers also need management

As seen above, 88% of data center outages are caused by technical errors or human accidents.

However, it is also worth noting that 12% of accidents are caused by climate.

In fact, in London this year, the data centers of Oracle and Google were cut off due to high temperatures exceeding 40 degrees in the summer.

Right now, something similar happened to us this summer, do you remember, readers?

During the torrential rain in the metropolitan area, the Yeouido Securities Company was flooded and the server went down, causing the computer management system to fail.

If the climate crisis intensifies in the future, the rate of disability due to climate such as flood damage due to heavy rain and malfunction due to high temperature may be higher than 12%.

Enlarging an image

In fact, the government has been preparing amendments to the law to protect data centers from unforeseen disasters, including climate conditions.

In 2020, the government voiced a voice that the government should also manage the data centers of companies on the grounds that "If key data is lost due to a broadcasting and communication disaster, the Internet data center does not work, and businesses and consumers can suffer enormous damage." there it is

The goal was to include data centers of companies such as Kakao when establishing the basic disaster management plan, just like national data centers and broadcasting and telecommunication facilities.

However, at the time, platform companies expressed reluctance on the grounds that government management of private companies' facilities could infringe the company's property rights.

There was talk of double regulation, but it did not lead to the enactment of the law.

However, from the government's point of view, the number of people using the services of private companies has grown as large as the infrastructure business, and it is impossible to let go of it.

As the digital economy grows and the size of the platform grows, the number of users will increase in the future, but it is a position that cannot be managed without management.

In addition, you have confirmed the confusion that arises when there is a gap in the service used by the majority of the people due to the Kakao incident.

So, in the end, on the 19th, the government and the ruling party decided to designate and manage data centers as the national core infrastructure under the Disaster Safety Act in the case of companies with great influence such as Kakao and Naver.

Who ate all those companies?

Readers must have felt how much platform companies have entered our lives in such a short period of time due to this incident.

With the acceleration of digitalization, as platform companies grow in size, our lives have become easier than in the past.

But even if the platform companies are scaling fast, they are too fast.

The scope of the expanding market is too wide.

The graph below is a graph that summarizes the domestic affiliates of Kakao and Naver based on the quarterly report data of the Electronic Disclosure System (DART), and the increase is significant.

For reference, Kakao's quarterly reports for 2009 and 2010 did not include affiliated companies, so they were left blank.

Enlarging an image

According to Kakao's quarterly report published in May 2022, there are a whopping 153 subsidiaries attached to Kakao!

According to the report at the same time, Naver had 90 subsidiaries, but in the second half of 2020, before LINE was separated, the number of subsidiaries was 127, similar to that of Kakao.

As the size of the company grows, so does the amount of revenue it generates.

Last year, the Ministry of Science and ICT conducted a survey of platform companies for the first time.

70% of them came from fees (brokerage fees, user fees).

As platform companies grew in size, the problems they had on society began to emerge little by little.

In the US and Europe, they took up a knife to preemptively regulate the market monopoly of platform companies before the problem escalated.

Have you ever heard of Amazon's antitrust paradox?

In the United States, a strong law called the Antitrust Act punishes companies that violate fair trade.

The core of the American antitrust law is to maximize the welfare of consumers.

From the point of view of consumers, the most important thing is to buy conveniently and cheaply.

According to these criteria, Amazon was not subject to antitrust laws, despite its monopolistic position in market share.

As a consumer, you can use Amazon to purchase products at a low price and conveniently.

The problem is that Amazon is a platform company.

Instead of selling products to consumers at a low price, there is a blind spot that the damage can be passed on to small businesses and workers who have contracted with Amazon.

If only the welfare of consumers is emphasized, the damage to platform workers could grow like snow.

As Lina Khan, who strongly criticized this paradoxical situation, was appointed as the youngest U.S. Federal Trade Commission Chairman, the U.S. is also beginning to regulate the platform economy.

As a result, in June of last year, the US House of Representatives passed a package of antitrust bills targeting platform giants in bipartisan cooperation.

Government regulation vs corporate responsibility

The situation in our country is similar.

From the user's point of view, when using the services of platform companies, they are using convenient services at relatively low prices, but the damage is being seen by platform workers.

According to a fact-finding survey conducted by the Korea Employment Information Service and the Ministry of Employment and Labor in 2021, the income earned from platform labor as a main occupation was only 1,923,000 won.

In the meantime, platform companies are increasing their corporate size through octopus-style expansion.

In this situation where platform companies are gaining weight and the treatment of platform workers is not improving, how is it the right answer?

For now, the government seems to be moving in the direction of regulating platform companies.

As mentioned above, it was decided to designate and manage the data centers of platform companies as the national core infrastructure under the Disaster Safety Act, and the Fair Trade Commission also announced that it would prepare a device to prevent platform companies from expanding octopus-style any more.

Some people are concerned that these regulations may infringe on the freedom of the market economy.

What do you readers think?

Enlarging an image

This is the letter Mabu News has prepared for you today.

The question Mabu News raises today is what readers think about regulations on platform companies.

Readers, do you think the government's preemptive regulation on platform companies is necessary?

Or do you think that instead of preemptive regulation, companies should go in the direction of strengthening corporate responsibility by severely punishing them when they do wrong?

Let our readers know what you think in the comments below.

Thank you for reading this long post today :) (*This article is an edited article from the Newsletter.)

Enlarging an image

Subscribe to the Stewardship Newsletter → https://page.stibee.com/subscriptions/56136

: Hye-Min Ahn

: Jun -Seok Ahn

: Do-Yeon Kim, Hae-Ram Joo