Corporate Reshuffling at LY: Line App Faces New Chapter
In a recent development that has stirred conversations in the tech industry, a leading Korean executive at LY, the company behind the popular messaging app Line, will be resigning from his position on the board. This comes as news from both Naver—the Korean internet giant—and LY, which is co-owned by Naver and SoftBank.
Shin Jung-ho, hailed as the “father” of Line in Korea, is poised to leave his role, prompting media to speculate about the potential waning of Naver’s sway over the messaging service that has a robust user base in Japan and Southeast Asia.
During a conference call, LY President Takeshi Idezawa conveyed through an English interpreter that Shin is set to step down from the board. Idezawa further revealed that the firms are working on concluding their outsourcing arrangements regarding services and business domains.
The discussions between Naver and SoftBank are ongoing concerning a possible revision of their ownership stakes in LY, as Idezawa noted. This dialogue has been influenced in part by the Tokyo government’s push to reduce Naver’s involvement in the firm.
The backdrop to these corporate maneuvers includes a mandate from the Japanese ministry directed at LY to diminish its financial ties with Naver, following an incident where personal data was compromised.
The proposed measures involve Naver divesting from A Holdings, a joint venture equally held by Naver and SoftBank, which in turn owns a majority share in LY. A Naver official confirmed Shin’s impending departure but clarified that it is not connected to the ongoing negotiations about the capital transfer.
Moving over to SoftBank’s perspective, President Junichi Miyakawa, in a separate conference call, acknowledged the discussions with Naver concerning capital ties and structure, stating that no definitive agreement has been reached yet. He indicated that SoftBank has been requested to reassess the capital ratio with Naver and is aiming for a resolution that would foster LY’s growth.
SoftBank is contemplating various options to enhance its stake and is committed to addressing security issues, in line with requests from Japan’s Ministry of Internal Affairs and Communications (MIC).
Miyakawa commended Naver for its cooperation in managing the aftermath of the data breach and during negotiations with SoftBank. The administrative guidance from MIC earlier this year has been to reduce LY’s reliance on Naver by transferring stakes to SoftBank.
In response to the cyberattack on Naver Cloud, which affected over 300,000 user records due to a shared authentication system, LY has announced security enhancements, including system separation from Naver and its cloud computing division.
The Japanese government’s stance on the matter has been met with criticism in Korea, viewed by some as an attempt to limit foreign influence on a key digital platform. Line, introduced by Naver in 2011, boasts about 96 million monthly active users in Japan, representing a significant portion of the population, and maintains popularity across other Asian markets.
Naver CEO Choi Soo-yeon, addressing the situation, mentioned that the company is still deliberating its position in light of its broader business strategy. The Korean government, through Seoul’s science ministry, has pledged to support domestic companies like Naver against any perceived unfair treatment abroad.
