South Korea Defends Firms Abroad after Japan’s Request to Reduce Naver’s Role in Line Operator LY Corp. Following Data Breach

In response to Japanese regulators requesting LY Corp., the operator of the popular messaging app Line, to decrease its reliance on Naver, the Korean partner in the business, South Korea has pledged to safeguard its firms working abroad. The demand stems from a significant data breach at Naver’s cloud computing services in the previous year, during which over 300,000 records, including details on Line users, were disclosed. Some Korean legislators have charged that Japan is forcing Naver to lower its stake in LY, urging the administration of President Yoon Suk Yeol to take a tougher stance against Tokyo. According to reports released by Naver, discussions between Naver and SoftBank regarding all potential outcomes, including the sale of Naver’s shares in LY Corp., are ongoing. On Wednesday, LY’s president, Takeshi Idezawa, informed journalists in Tokyo that Naver and SoftBank were reviewing their equity holdings in the platform operator with the assumption that SoftBank would acquire a dominant position. A high-ranking South Korean technological ministry official addressed reporters on Friday, confirming that the orders given to LY by Japan’s Internal Affairs and Communications Ministry did not explicitly mandate Naver to downsize its stake in the organization. Nonetheless, the official stated that Seoul regrets how this measure has been interpreted as pressure on Naver to sell out. “I would want to reaffirm that our administration is steadfastly committed to ensuring that our enterprises, such as Naver, do not encounter any difficulties or prejudice in foreign operations and investments,” the official remarked. Since assuming power in 2022, Yoon has placed a premium on enhancing relations with Tokyo, which had deteriorated owing to historical disagreements, and reinforcing collective safety collaboration with Japan and the United States against North Korean atomic threats. The official asserted that the government would back whichever choice Naver makes concerning its involvement in the partnership. If Naver chooses to retain its position in the partnership, the technological ministry would assist it in strengthening its cybersecurity defenses.