Gov't to support Naver if it maintains stake in Line despite Japanese pressure

Workers pass by the Line Yahoo's headquarters in Tokyo, Japan, on Thursday. [YONHAP]

Korea’s Ministry of Science and ICT issued a statement on Friday that the government will support Naver’s decision if it chooses to maintain its stake and business in Line Yahoo (LY), the Tokyo-based operator behind Line.

The statement comes amid criticism of the government’s alleged apathy regarding the issue as Naver faces pressure from the Japanese government to reduce its ownership in LY.

It was the first official briefing by the government on the issue.

“While the Japanese government claims that there was no mention of equity divestment in the administrative guidance, we regret that it is perceivably pressuring Naver to diminish its ownership in LY,” said Vice Science Minister Kang Do-hyun at a press briefing at the governmental complex in central Seoul.

“The government has respected Naver’s stance and has been waiting for Naver to make decisions based on its long-term business strategy.”

Kang also stressed that the government has been closely consulting with Naver since the massive data breach last October that led to the ongoing corporate standoff, as Japan’s Ministry of Internal Affairs and Communications pressed LY to review its capital-based governance relationship with Naver this year.

Kang said the government will respond “firmly and forcefully” to any discriminatory measures against Korean companies operating overseas businesses, and support Naver if it maintains its position to retain its stake and business in LY.

LY is 64.5 percent owned by A Holdings, a 50:50 joint venture between Naver and SoftBank.

Naver said in a statement Friday that it is in the midst of discussions with Softbank and is “exploring all possibilities,” including unloading its stake in LY.

“Please understand that we cannot disclose detailed information until a conclusion is reached,” Naver said. “We will try to provide further explanations based on confirmed knowledge in the future.”

The growing possibility that management control over LY might be handed over to Softbank led Naver’s labor union to hold a closed-door meeting on Friday afternoon amid potential job insecurity.

In anonymous online posts, some posters who claimed to be Naver employees were worried that Naver’s cloud technologies might lose momentum if Line moves to Japan. Others suggested that it was time to relinquish the superficial management rights that Naver holds over the company and enter the Southeast Asian market.

There were also voices expressing discontent with the lack of communication from management to employees.

Line Plus CEO Lee Eun-jung will also convene an internal meeting on Tuesday, during which the Naver executives are expected to reveal more details about their discussions with SoftBank.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]