Takeshi Idezawa, the CEO of LINE Yahoo Japan. Criticism has emerged from the IT industry following the Japanese government's pressure on Naver, a South Korean tech giant, to sell its shares in LINE Yahoo. /Reuters

Criticism from the IT industry has emerged since the Japanese government pressured Naver, a South Korean tech giant, to sell its shares in LINE Yahoo.

In 2019, LINE Yahoo was created as a result of a merger between Japan’s leading messenger service, LINE, and the largest search platform, Yahoo Japan.

The Chairman of SoftBank, Masayoshi Son, proposed a collaboration with Naver’s LINE to establish an online business platform that encompasses search, shopping, messaging, and mobile payment services. The combined user base of both companies exceeded 100 million, and LINE Yahoo has set its sights on surpassing global tech giants such as Google and Amazon.

LINE Yahoo has been expanding its business and growing steadily ever since the merger.

For the fiscal year 2021, the revenue of LINE Yahoo reached a record high of 1.5674 trillion yen. The following year, the revenue increased to 1.8146 trillion yen (approximately 15.928 trillion won), which marked an 8.5% increase.

The operating profit reported for the last year was 208.1 billion yen (about 1.8 trillion won). Line Yahoo has expanded its user base beyond Japan, and currently, it has over 200 million users in Taiwan, Thailand, and Indonesia. The majority of Line Yahoo’s technology originated from Naver, which is a South Korean online platform giant.

This is why the Japanese government’s attempt to force LINE Yahoo to sell off Naver’s shares has been criticized as an act of betrayal. The reason for this is that the hacking incident that occurred in Nov. 2023, which triggered this situation, was not as severe as similar incidents in the past.

During the incident, Naver’s cloud, which manages LINE Yahoo’s data servers, was hacked, resulting in the personal information of 510,000 accounts being leaked. However, when compared to Facebook’s hacking incident in 2021, where over 500 million users’ personal information was leaked, the extent of the damage caused by the LINE Yahoo incident was minimal.

An industry expert in the IT sector stated ”Due to the increasing popularity of S. Korean platforms such as Naver and Kakao’s webtoon services in Japan, there is a rising inclination to check the S. Korean companies. As LINE Yahoo’s influence expanded in Japan, they are now using a minor issue as an excuse to tell Naver to cease its services and depart.”