SoftBank, which is under Japanese government scrutiny for information leaks, is expected to maintain its capital relationship with Naver over Line Yahoo (LY) for now.
According to a July 16 report by The Asahi Shimbun, SoftBank, the majority shareholder of LY, has temporarily decided to suspend its LY capital relationship review. As a result, SoftBank and Naver will each continue to hold a 50% stake in LY’s parent company, A Holdings. Following discussions with Naver, a SoftBank official stated, “We can’t move at this time.”
Despite this short-term decision, SoftBank remains committed to pursuing the share purchase in the medium to long term to establish the Line application operator LY as a ‘Japanese platform’ in the future.
The Asahi Shimbun noted that domestic public opinion in South Korea influenced SoftBank’s decision. The report highlighted reactions from South Korean opposition parties and the Naver labor union against the Ministry of Internal Affairs and Communications’ administrative guidance. Additionally, there are concerns within the Japanese government about LY becoming a new flashpoint in Japan-South Korea relations.
Earlier this year, the Ministry of Internal Affairs and Communications issued two administrative orders to LY in March and April, urging strengthened cybersecurity measures. This came after revelations that over 510,000 personal information records might have been leaked through Naver Cloud in South Korea last year. The orders included a request to review capital relations, sparking controversy over Japan’s perceived attempt to gain control of LY from Naver.
