The South Korean government has firmly opposed the Japanese government’s demand for Naver to sell its stake in Line to a Japanese company, emphasizing non-discrimination against South Korean businesses amid concerns over ownership control and data security.

The S. Korean Ministry of Foreign Affairs made a statement declaring its firm stance against any discriminatory actions taken against S. Korean companies on Apr. 27.

This statement was made in response to the pressure exerted by the Japanese government on Naver, a S. Korean company, to sell its stake in the messaging application ‘Line’ to a domestic Japanese company.

신중호 라인야후 최고제품책임자(당시 라인 최고글로벌책임자)가 지난 2016년 7월 14일 뉴욕 증권거래소에서 라인 상장을 알리는 종을 치고 있다./조선DB

According to Yonhap News, a Ministry of Foreign Affairs official said, “We will confirm Naver’s position on this issue and, if necessary, communicate with the Japanese side.”

Japanese media recently reported that SoftBank has requested Naver to sell its shares in A Holdings, which owns 64.5% of Line Yahoo.

A Holdings owns 64.5% of Line Yahoo, a joint venture between Naver and Japan’s SoftBank. Line Yahoo offers a messaging application called Line, which is the most popular messaging app in Japan, used by around 80% of the population (approximately 122 million people). The messaging app is created by Naver, and A Holdings services the largest portal in Japan, Yahoo.

After Naver’s cloud (virtual server), which manages customer information for Line, was hacked in November last year, Japan’s Ministry of Internal Affairs and Communications issued administrative guidance related to the hacking incident last month, pressing for a resolution of the equity relationship with Naver.

Kyodo News reported that “if SoftBank acquires even a small additional stake from Naver in A Holdings, it could gain control of Line Yahoo.”

However, It is hard to compare the United States’ ban on TikTok with Japan’s localization policy for Line, especially since S. Korea and Japan are allies. This has given rise to criticism that the Japanese government’s motive to alter the ownership of a significant platform owned by a S. Korean company might be a severe punishment.