Naver at risk of losing Thailand, Taiwan messenger businesses

Line Plus headquarters in Pangyo, Gyeonggi [NEWS1]

Naver, a leading internet company in Korea, may no longer be able to run its overseas business through the globally popular messaging app Line due to Tokyo’s pressure on Naver to divest its stake in Line Yahoo (LY), the operator of Line.

“There are no direct capital or personnel relationships between Naver and Line Plus,” LY responded to a query from local media outlet Yonhap. “Line Plus will continue to oversee overseas operations in regions such as Taiwan and Thailand as a subsidiary of LY.”

When asked about the possibility of transferring Line Plus to Naver in future negotiations, LY said, “There are no plans for that at this time.”

The company emphasized that Line Plus, as an LY subsidiary, will continue to maintain its outsourcing contract with its parent company although it will end the relationship with Naver.

The Japanese government demanded a review of Naver’s capital influence on LY following a data breach incident in October. Naver, being both the outsourcing partner and a major shareholder, made it difficult for LY to exercise management control.

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

Line Plus is a wholly owned subsidiary under Z Intermediate Global, itself a subsidiary of LY.

Line Plus was established in 2013 with the aim of expanding Line’s global market presence and currently offers tailored services in regions such as Taiwan, Thailand, Indonesia and Japan.

In Taiwan, it offers the news curation service Line Today, the fintech service Line Pay, Line BK and the delivery service Line Man.

In Indonesia, Line focuses on the fintech business and operates related services, Line Split Bill and Line Bank.

In total, there are about 2,500 Korean employees under LY, including the Korean and Japanese subsidiaries of Line Plus.

The October data breach incident spilled some 510,000 items of personal information about users, business partners, employees and other personnel through its subcontractor, Naver Cloud.

Japan’s Ministry of Internal Affairs and Communications issued two administrative guidances in March and April requesting LY to cut cybersecurity and capital ties with Naver.

Naver and SoftBank are in discussion about their response to the Japanese government’s demands, which have a deadline of July 1.

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