SoftBank, Naver 'recognize the difficulties' of cutting off Line Yahoo

Line Plus headquarters in Pangyo, Gyeonggi. [YONHAP]

The two shareholders of Line Yahoo (LY) — SoftBank and Naver — see reducing their stakes in the Tokyo-based operator in the short term as a difficult task, according to a report LY sent to the Japanese government on Monday.

The firm behind Line said that shareholders are still in discussions regarding the Japanese government's pressure to cut ties with Naver, including an April-issued directive requesting that it produce specific measures for doing so by July 1.

“We have been informed that both companies recognize the difficulties associated with short-term capital movements between them at this time,” LY said. “Both companies have been cooperative in their response, and we intend to continue working to advance progress in the discussions.”

LY — 64.5 percent of which is owned by A Holdings, a 50:50 joint venture between Naver and SoftBank — did not commit to a timeline for announcing the outcome of those ongoing talks.

The report did, however, outline specific plans to accelerate the process of cutting cybersecurity ties with Naver.

The company is currently in the process of severing the digital systems that manage LY employees from those that house Naver's. All of those workers, previously, were managed by Naver Cloud. The division is set to be completed by March 2025, but the timeline for its overseas subsidiaries has been moved up from December 2026 to March of the same year.

LY’s authentication system, previously also managed by Naver Cloud, has been blocked, and the firm will continue to delete unnecessary employee information that remains within Naver by April 2025 for the Tokyo headquarters and April 2026 for overseas subsidiaries.

And Naver Cloud will no longer manage the monitoring duties of LY’s Security Operations Center (SOC) beginning in October; the operations will be transferred to a Japanese company.

“Log data, analysis systems, and Tier 1 monitoring operations will be transferred to Japan, making it possible to complete all SOC operations in Japan,” LY said. “We believe this will enable a more rapid response to security incidents.”

The tensions between LY and its shareholders were sparked by a data breach in October that resulted in the leak of some 510,000 items of personal information about users, business partners, employees and other personnel through Naver Cloud.

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