There are concerns that the LINE information leak issue will cause a rift between SoftBank and Naver, which could have a negative impact on Japan-Korea relations.



LINE is a messaging app used mainly in Japan, and A Holdings , the parent company of Yahoo !, is half owned by Japan's SoftBank and half by South Korea's Naver . In Japan-South Korea relations, where diplomatic tensions are likely to arise due to historical reasons, the situation surrounding LINE is symbolic of the cooperation between the two countries, but the American daily newspaper The New York Times has reported that tensions over the ownership of LINE have arisen again in recent years.

Japan and South Korea Are Fighting Over an App at a Tense Time - The New York Times
https://www.nytimes.com/2024/06/24/business/naver-softbank-line-south-korea-japan.html



LINE, developed by a subsidiary of the Korean internet company NAVER, was conceived in response to the disruption and interruption of telephone lines during the Great East Japan Earthquake in March 2011, making it difficult for people to communicate. The app was officially launched in June 2011, and at the time of writing, it was the leading messaging app in Japan, and was also gaining users in Taiwan, Thailand, and Indonesia.

In 2019, Masayoshi Son, founder of SoftBank, and Haejin Lee, founder of Naver, agreed to a business integration of their subsidiaries, Yahoo and LINE, and it was decided that Z Holdings (now LINE Yahoo) would operate Yahoo and LINE. In 2023, the group was reorganized , and Z Holdings absorbed LINE and Yahoo, changing its name to LINE Yahoo, which it remains to this day. A Holdings, the parent company of LINE Yahoo, is a joint venture company in which SoftBank and Naver have signed a joint venture agreement, with each company investing 50%.

In 2018, Nippon Steel Sumitomo Metal (formerly Nippon Steel) was ordered to pay damages over the issue of Koreans forced to work during World War II (the issue of former Korean workers ), and the following year, the Japanese government removed South Korea from its white list of countries eligible for preferential trade treatment. In 2019, Japan-South Korea relations were at a historically low ebb. For this reason, the partnership between SoftBank and Naver was symbolic of cooperation in tense diplomatic relations.

In March 2023, the Yun Seok-yeol administration in South Korea, which is working to improve relations with Japan, announced a 'solution' to the issue of forced laborers, in which a government-affiliated foundation would pay the equivalent of compensation. In the same month, the first Japan-South Korea summit in 12 years was held , excluding those held in conjunction with a conference, and export restrictions on semiconductor materials to South Korea were lifted , greatly improving Japan-South Korea relations.



However, the New York Times points out that a rift has developed between SoftBank and Naver over the operation of LINE. In November 2023, LINE Yahoo announced that someone had attacked the server of a company that outsourced NAVER and that LINE Yahoo's system had also been illegally accessed, resulting in the leakage of approximately 440,000 pieces of LINE user information. The leaked information was later revised to approximately 520,000 pieces of information.

In response to this issue, the Japanese government's Personal Information Protection Commission issued a recommendation to Yahoo! JAPAN to improve its measures to protect personal information, stating that the measures taken to protect such information were insufficient. In the same month, Yahoo! JAPAN also received administrative guidance from the Ministry of Internal Affairs and Communications, requesting that the same incident not be repeated.

The Ministry of Internal Affairs and Communications issued a second administrative guidance in April, asking LINE Yahoo to review its capital relationship with NAVER, which was the cause of the data leak, escalating the situation to a backlash from NAVER and some analysts. In a press conference in May, President Yoon's Chief Policy Advisor argued that if LINE Yahoo puts forward a sufficient plan to strengthen security, the Japanese government should not take measures to force the sale of NAVER shares, saying, 'We will continue to work to ensure that Korean companies are not subjected to discriminatory or unfair treatment overseas.'

Afterwards, at a press conference on May 10, Minister of Internal Affairs and Communications Matsumoto emphasized that the administrative guidance called for a review of security across the entire group, and that the purpose was not to take away Naver's involvement in management. Furthermore, at the Japan-South Korea summit meeting in May, Prime Minister Kishida and President Yoon confirmed their understanding that the LINE issue was separate from the relationship between the two countries, and that ' it needs to be managed so that it does not become an issue .'

Maiko Takeuchi, CEO of CCSI Asia Pacific, which advises governments on international security, commented, 'As we have seen many times in the past, Japan-Korea relations are volatile and small tensions can quickly escalate, whether in wartime or peacetime, with wide-ranging implications on defense and diplomacy. There is a strong view from the United States and other countries that maintaining good relations between Japan and Korea is more important than ever.'

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