S. Korean ministry voices regret over Japan’s ‘pressure’ over Line messenger

May 10, 2024

The science ministry on Friday expressed regret over the Japanese government’s “pressure” over the Line messenger app, saying that Seoul would “strongly and sternly” take measures against Tokyo’s move against the popular app developed by Naver, South Korea’s biggest internet company.

Second Vice Science Minister Kang Do-hyun made the remarks a day after Japan’s SoftBank confirmed it has been in talks with Naver over its capital relationship in LY Corp., the operator of Line messenger.

Kang told reporters that his ministry “expresses regret over what is perceived as pressure on a Korean company to sell a stake,” referring to an administrative guidance by Japan to LY over a data leak incident last year.

South Korea will “respond strongly and sternly to discriminatory measures against our company,” Kang said, noting the government has been in close communications with Japan over the matter.

The government will respect Naver’s decision, and if it decides to keep its stake in LY, the ministry will provide necessary help to Naver to strengthen its security system, Kang added.

LY is controlled by A Holdings, a 50-50 joint venture between Naver and SoftBank.

Kang also noted that SoftBank had practical management control over LY since 2019, citing the compostion of LY’s board, and Naver has been considering various possibilities regarding its stake in LY as it experienced difficulties in implementing its technologies and business insights in the Japanese company.

Earlier Friday, Naver also confirmed it is in talks with SoftBank and is “open to all possibilities,” including shedding its shares in LY.

The Korean company said in a statement it “feels sorry” to LY users over the data leak incident, and will work with LY and SoftBank to improve the service.

Naver CEO Choi Soo-yeon said last week Japan’s measures are “quite exceptional” but the company will make a decision based on its mid- to long-term business strategy.

In March and April, Japan’s Ministry of Internal Affairs and Communications issued an administrative guidance to LY, regarding the incident, urging it to decrease its financial dependence on Naver.

In November, LY explained that over 300,000 records of personal information of its users were leaked after Naver Cloud Corp., Naver’s cloud computing affiliate, came under a cyberattack, as the two companies share a common authentication system.

Following the incident, LY has announced a set of measures aimed at strengthening its security, including separating its system from Naver and Naver Cloud.

On Wednesday, LY President Takeshi Idezawa said in a conference call via an English interpreter that his company has started to terminate its outsourcing relationship with Naver in the area of services and business domains.

Idezawa also announced that Shin Jung-ho, a key South Korean executive at LY, will step down from its board.

Shin, known as the “father” of Line in South Korea, was the only Korean national on LY’s board.

Japan’s actions drew criticism in South Korea, with many viewing them as an attempt to diminish foreign influence on the widely used online platform in the country.

Line, developed by Naver in 2011, had around 96 million monthly active users (MAUs) in Japan, or 78 percent of the country’s population, as of last year, according to Line Plus Corp., Naver’s affiliate that operates the application in Korea.

The application is also popular in other Asian countries, with around 55 million MAUs in Thailand and 22 million in Taiwan.