In relation to the fact that the management rights of the messenger application “LINE,” which took South Korea’s Naver 13 years to grow and has an overwhelming number of users in Japan, is facing the threat of being transferred to Japan, the Japanese are nervous about whether the issue will turn into a diplomatic row between South Korea and Japan. The Japanese online media Hyundai Business reported on January 1 that the Japanese government’s administrative guidance demanding a review of capital ties and management structure in the wake of the personal information leakage at LINE Yahoo is strongly opposed in South Korea as an unjustified measure. The media outlet detailed the outcry in South Korea’s conservative and progressive press, business press, and ruling and opposition political circles, which included “Japan’s measure is to throw cold water on South Korea-Japan industrial cooperation,” “an anti-market act,” and “the Yun Seok-yeol administration has also expressed concern. The Yun Seok-yeol administration, pushed by the outpouring of criticism, also expressed its concern to the Japanese government through the Ministry of Foreign Affairs, and stressed that there is a high possibility that the issue will spark a diplomatic incident. Hyundai Business reported, “For the first time in a long time since the inauguration of the Yun Seok-yue administration, Japan-Korea relations have been enjoying a pleasant breeze, but with the South Korean ruling party’s disastrous general election defeat, the LINE Yahoo issue has come to light, and there is a danger that ‘anti-Japanese sentiment’ will once again swing in South Korea. The major Japanese media, which until now had reported only on the situation in Japan, also reported extensively on the announcement by the South Korean Ministry of Foreign Affairs on March 27 of its official position that “there should be no discriminatory measures against South Korean companies. Japan has also been evaluating that it is unusual for the government level to pressure a company to sell its stock holdings due to the leakage of personal information. The Nihon Keizai Shimbun reported, “The Ministry of Internal Affairs and Communications has requested a review of capital ties with the South Korean company, a major shareholder, in an unprecedented move that has led to widespread concern over the future of the company’s management,” and “LINE Yahoo’s stock price has slumped. The problem began last November. When Neighbor’s cloud was infected with malware through a cyber attack and personal information was leaked from LINE Yahoo, which shares some internal systems, the Japanese Ministry of Internal Affairs and Communications issued administrative guidance twice in March and April of this year. The Japanese government demanded that LINE Yahoo improve its management system, including “reconsidering the capital relationship with Neighbor” because of its “excessive dependence on Neighbor and inadequate cybersecurity measures. Under pressure from the Japanese government, SoftBank has entered into talks with Naver to acquire its shares. Neighbor and SoftBank each hold a 50% stake in A Holdings, the major shareholder of LINE Yahoo! If SoftBank acquires shares from Neighbor and becomes the sole major shareholder, Neighbor would lose control of LINE. Neighbor launched LINE in Japan in June 2011 and has grown to become the dominant messenger application in Japan with 96 million users who use the service at least once a month. LINE has a dominant market share not only in Japan, but also in Thailand, Taiwan, and Indonesia, and has 200 million users worldwide. Tokyo / By So-young Kim, Correspondent May 3
