Tensions Rise Over Line Mobile Messenger’s Management
In a recent development that may strain Korea-Japan relations, the Japanese government has initiated a move to diminish Naver’s involvement in the management of the Line mobile messenger app, a source of consternation for industry and government officials in Korea.
The issue surfaced following a press release on March 5 by Japan’s Ministry of Internal Affairs and Communication, which highlighted concerns over Naver’s financial influence on LY Corp., the Tokyo-based operator of Line. This move was a reaction to a significant data breach last November that exposed Line users’ personal information through Naver’s Korean cloud servers.
SoftBank, in response to the Japanese government’s non-binding administrative guidance, has reportedly opened discussions with Naver to potentially purchase a portion of the Korean IT giant’s 50 percent stake in A Holdings. The joint venture between Naver and SoftBank, which was announced in 2019, controls a 64.5 percent stake in LY Corp., and oversees Line and Yahoo! Japan.
The possibility of SoftBank’s stake acquisition has stoked fears that Naver may lose its sway over Line. This concern was voiced by Rep. Yoon Sang-hyun of Korea’s ruling People Power Party, who criticized the Japanese guidance as overreaching and called for its immediate retraction to avoid a diplomatic rift.
Yoon emphasized the importance of dialogue between the nations to prevent escalation on this front. Meanwhile, officials from Korea’s foreign and ICT ministries have expressed their commitment to engage with Naver to address the situation.
An official from Korea’s foreign ministry reiterated the government’s position against discriminatory actions towards Korean companies. The issue has also drawn criticism from lawmaker-elect Cho Kuk, who chided the Yoon administration for its muted response, and other lawmakers-elect who have called for a firm stance against Japan’s actions.
Naver has currently withheld comments on the matter, citing the ongoing deliberation over its stake in LY Corp. However, LY Corp. has requested Naver to reassess their partnership. According to Korea Investment & Securities analyst Jung Ho-yoon, Naver’s reluctance to sell its stake suggests that a resolution may not be imminent, and a reduction in stake could mean missing out on the expanding Japanese internet market.
