The Japanese government is putting pressure on Naver, the operator of Japan’s national messaging service ‘Line’, to give up its stake in the local joint venture called Line Yahoo. Line Yahoo was established with equal shares held by Naver and Japan’s SoftBank and is currently managed by Naver. This pressure comes after a hacking incident in November last year, where customer information stored on Naver’s cloud (virtual server) was leaked, which affected 510,000 individuals.
The Japanese Ministry of Internal Affairs and Communications demanded measures to prevent recurrence and urged Naver to sort out the shareholding. As a result, SoftBank, Naver’s Japanese partner, has requested Naver to sell its stake in Line Yahoo’s parent company, ‘A Holdings’, as reported by Japanese media.
Data breaches often result in government-imposed fines and remedial measures. However, the recent move by the U.S. Congress to force the divestment of the Chinese video app ‘TikTok’ in the U.S. is a rare step that aims to prevent potential information misuse by a hostile nation.
While South Korea and Japan are allies, the Japanese government’s attempt to dissolve a joint business relationship established through contracts between private companies in Japan and Korea is considered anticompetitive behavior. It likely violates the 2003 S. Korea-Japan Investment Agreement, which stipulates ‘national treatment’ for investment companies from both countries. This issue could potentially lead to international litigation.
Although it can be concerning to have personal information of Japanese citizens in the hands of a foreign company, it is not permissible to infringe on the property rights of foreign investment companies arbitrarily.
The administration of Yoon Suk-yeol has successfully resolved the issue of compensation for forced laborers, which had been hindering the restoration of relations with Japan. The previous administration had almost caused a collapse in the relationship. The Yoon Suk-yeol administration proposed a ‘third-party payment plan’ to solve the issue.
The Moon Jae-in administration had scrapped the Korea-Japan General Security of Military Information Agreement (GSOMIA), but it has now been normalized. Japan has also lifted its export restrictions on crucial semiconductor materials. As a result, the relations between the two countries have significantly improved, and shuttle diplomacy has been restored.
However, the Japanese government’s pressure on Naver, a leading Korean company, to sell its shares is a detrimental blow to the friendly relations between the two countries. It is equivalent to declaring S. Korea an ‘unreliable country’. This unfair pressure should immediately stop, and the government should step forward to diplomatically resolve the issue. Private companies face difficulties confronting the Japanese government, so it is necessary for the government to intervene.
