The World Today for November 03, 2022


The Fifth Estate


More than 90 percent of smartphone users in South Korea use the Kakao suite of apps to do everything from instant messaging and banking to watching videos and locating nearby beauty salons. When a data center fire recently caused the apps to crash for a few days, the county lurched toward a near-shutdown.

“Millions of people had trouble getting in touch with one another,” wrote the New York Times. “Many could not pay for everyday items at convenience stores or order food and groceries. Travelers were left stranded because they were not able to book taxis, depriving drivers of income.”

The outage was calamitous for the Jeju City-based company. Millions of South Koreans downloaded Uber, Telegram and other apps during the outage to find the services they needed. More importantly, the event was also a wake-up call for officials and citizens about the power of tech, the inordinate dependence of modern, wealthy economies on tech products and the ensuing vulnerabilities when machines invariably break down.

In the wake of the outage, Kakao Corp’s co-CEO Namkoong Whon stepped down, reported CNBC, issuing a contrite message that conveyed the depth of shame imparted by the worst infractions in South Korean culture. The company lost $50 billion in market value, noted Bloomberg, adding that calls to lessen its monopolistic influence and reach – for example, South Korea’s central bank uses the KakaoTalk app to announce interest rate moves – would likely make investors question its value further.

The company is considering giving damage compensation payments to customers. South Korean President Yoon Suk Yeol called for a probe that might recommend changes to the app and its uses, saying it was a vital part of the country’s communications infrastructure and therefore national security, the Korea Times wrote. Other countries have considered similar action and targeted regulation based on the idea that Big Tech makes up critical infrastructure just as the energy and banking sectors do.

The shutdown illustrated how private companies don’t think broadly about systemic risk, the Washington Post explained. The company put all its servers in one place. It didn’t have backup generators to make up for damaged ones. Both of those measures are standard for Big Tech in the US, for example.

Meanwhile, for years governments around the world have been taking action to avoid crises like the one that occurred in South Korea.

The European Union is making it easier for individuals to sue tech companies when their artificial intelligence causes harm, according to the MIT Technology Review. Indian regulators fined Google $113 million for compelling users to use Google Play Billing System to purchase apps on Google Play, for example, reported Gizmodo. China’s government is exercising strict control over Big Tech, even demanding that social media influencers must have expertise in the topics they discuss online, Wired magazine wrote.

Everyone is wrestling with the problems that everyone agrees will not go away.

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