Home Internet South Korea’s Biggest Internet Firm Considers Future in Japanese Messaging App

South Korea’s Biggest Internet Firm Considers Future in Japanese Messaging App

(Bloomberg) — Naver Corp., South Korea’s biggest internet company, is reviewing options for its holding in the operator of Japan’s most popular messaging app following pressure from Tokyo.

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The company hasn’t determined its stance on its stake in LY Corp., Chief Executive Officer Choi Soo-yeon said on an earnings conference call Friday. Administrative guidance by Japan’s Ministry of Internal Affairs and Communications for Naver to reduce its holding is “quite extraordinary,” she said.

Japan’s government began taking a closer look at the venture after a cybersecurity breach of Naver’s cloud service in 2023, which helped manage user information for the hugely popular Line messaging app operated by LY. Naver owns LY together with Japan’s SoftBank Corp., the telecom arm of SoftBank Group Corp.

The Japanese government’s guidance suggests it is seeking a single, clear controlling shareholder to ensure stronger safeguards, versus the existing 50-50 partnership.

“It’s not about whether we comply with that guidance or not,” Choi said. “What’s important is that we make this decision and review from a mid-to-longer term business plan.”

Naver developed and launched the WhatsApp-like Line through its Japanese subsidiary in the aftermath of an earthquake in the country in 2011. Line has since become the top messaging app in Japan with 198 million users globally as of March 2023.

LY is majority owned by A Holdings, a 50-50 joint venture between Naver and SoftBank. LY’s businesses also include Yahoo! Japan, the country’s most popular web portal. The South Korean government is in close consultations with Naver in response to the Japanese government’s guidance, Choi said.

–With assistance from Mayumi Negishi.

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