The Japanese government has effectively withdrawn its demand for South Korea’s Naver to sell its stake in LINE Yahoo. Initially, in April and May, the government issued two administrative orders to “review Naver’s capital relationship” with LINE Yahoo after a data breach that exposed approximately 520,000 personal records, pressuring Naver to relinquish its management rights. However, increasing anti-Japanese sentiment in South Korea has prompted the Kishida administration, which prioritizes improving Japan-South Korea relations, to reverse its stance and drop this demand.
A senior official from Japan’s Ministry of Internal Affairs and Communications (MIC) told The Chosunilbo on July 12, “The countermeasures report submitted by LINE Yahoo on the 1st is not just a ‘pipe dream’ but a solid plan, which we highly appreciate.” He added, “LINE Yahoo has addressed our security-related governance concerns by establishing an internal governance committee and strengthening the role of outside directors.”
The MIC had previously called for a review of Naver’s stake in LINE Yahoo to strengthen security governance, arguing that the data breach occurred due to LINE Yahoo’s inability to effectively manage and supervise its parent company, Naver. However, the official clarified, “The purchase and sale of Naver shares is not within the purview of the Ministry of Internal Affairs and Communications,” and added, “When we assess LINE Yahoo’s compliance with the report in the future, the issue of Naver shares will not be considered.” This indicates that the current measures are deemed sufficient, and the ministry will not require Naver to sell its stake.
The MIC has reportedly informed LINE Yahoo and Japan’s SoftBank about its change in stance. SoftBank and Naver jointly own A Holdings, the largest shareholder of LINE Yahoo, each holding a 50% stake.
