South Korea Vows to Protect Businesses Abroad amidst Naver-Line Conflict with Japanese Regulators

In response to Japanese regulators ordering LY Corp., the operator of the popular messaging app Line, to decrease its reliance on Naver, the South Korean partner in the venture, the South Korean government has pledged to safeguard its enterprises working abroad. The conflict involving Naver’s 50% holding in LY, a partnership with SoftBank, emerged after a significant data breach at Naver’s cloud computing services last year. Following the disclosure of more than 300,000 records, including personal details of Line users, the Japanese authorities asked LY to enhance its administration and minimize its reliance on Naver. Some Korean politicians have criticized Japan for putting pressure on Naver to decrease its involvement in LY, urging President Yoon Suk Yeol’s administration to adopt a strict stance towards Japan. A senior official from the South Korean Ministry of Science and ICT communicated to journalists on Friday after Naver revealed it was exploring all options, including selling its shares in LY Corp., with SoftBank. On Wednesday, LY’s CEO, Takeshi Idezawa, informed journalists in Tokyo that Naver and SoftBank were mulling over their ownership stakes in the app operator with the assumption that SoftBank would assume command. Kang Dohyun, South Korea’s second Vice Minister of Science and ICT, stated during a media briefing in Seoul that the orders delivered to LY by Japan’s Internal Affairs and Communications Ministry did not explicitly demand that Naver reduce its stock in the organization. Nonetheless, he expressed regret that these commands were being perceived as coercion for Naver to follow suit. “I would like to emphasize once again that the government is unwaveringly devoted to making sure that our firms, including Naver, do not encounter any handicaps or unfavorable treatments while doing business overseas,” Kang said. “We will resolutely and forcefully counter any retaliatory measures adopted against our enterprises.” Since assuming office in 2022, President Yoon has concentrated on enhancing relations with Tokyo, which had deteriorated due to ancient grudges, and reinforcing mutual safety cooperation with Japan and the United States in the face of North Korean atomic threats. Kang mentioned that the administration would assist Naver whatever decision it takes regarding its investment in LY. If Naver chooses to maintain its involvement in the joint venture, the Ministry of Science and ICT would aid it in bolstering its cybersecurity.