Naver Corporation Faces Pressure from Japanese Government
The dynamics between international tech companies are often as intricate as they are impactful, and the recent developments involving Korea’s Naver Corporation and its renowned messaging app LINE are no exception. The Japanese government’s push for changes in the operational control of LINE has rippled through the market, evident in the waning stock prices of Naver. At the close of trading on May 9, Naver shares were valued at 187,400 KRW (~136.65 USD), marking a modest decline by 1.83% from the day before.
Earlier in the trading session, Naver’s stock had dipped even further to 185,500 KRW (~135.28 USD). This financial fluctuation is closely tied to the announcement from LINE Yahoo, indicating a planned “gradual termination” of its technical collaboration with Naver. This strategic pivot follows the Japanese government’s counsel that LINE Yahoo reevaluate its capital ties with Naver, spurred by concerns over a past incident involving a breach of LINE users’ personal data.
At the heart of this discussion is A Holdings, the umbrella entity of LINE Yahoo’s largest shareholder, which is jointly owned by Naver and SoftBank, each possessing an equal 50% stake. However, the winds of change are blowing, with indications that the Japanese government prefers SoftBank to secure a controlling interest in LINE, a platform that has embedded itself into the digital fabric of Japan since its inception in June 2011.
Adding to the narrative, Idezawa Takeshi, CEO of LINE Yahoo, confirmed on May 8 that the company is poised to dissolve its commission-based relationship with Naver. With over 700 million global users, LINE’s standing as Japan’s premier messaging app, originally developed by Naver and Hangame through their subsidiary NHN Japan, is undisputed.
Industry observers have noted that the exit of Shin Jung Ho, also revered as the “Father of LINE,” from the board of directors, and the subsequent appointment of a Japanese executive, might be a calculated step towards diminishing Naver’s sway over LINE’s operations.
In the midst of these developments, the South Korean government has stepped forward to assert its commitment to shielding domestic companies from potential bias or adverse actions by foreign regulators. Second vice technology minister of South Korea, Kang Dohyun, delivered a staunch message, emphasizing the government’s dedication to safeguarding the interests of South Korean enterprises like Naver in their international endeavors.
Amidst these corporate chess moves, both companies and governments are positioning themselves strategically, with the tech community observing closely how these partnerships and power balances will evolve.
