South Korea stresses need for fair treatment for Line chat app operator Naver

SEOUL – South Korea vowed Friday to protect its companies operating in other markets after Japanese regulators told LY Corp., which runs the popular chat app Line, to reduce its dependence on Naver, the Korean partner in the venture.

Friction over Naver’s 50% stake in LY, a venture with Japan's SoftBank, surfaced after a major security breach at Naver’s cloud computing servers last year. The Japanese side instructed LY to improve its governance and rely less on Naver after the leak of more than 300,000 records, including information of Line users.

Some Korean politicians have accused Japan of pressuring Naver to reduce its stake in LY, demanding that President Yoon Suk Yeol’s government adopt a stern stance toward Tokyo.

A senior Korean technology ministry official spoke with reporters Friday after Naver confirmed it was discussing with SoftBank “all possibilities,” including selling its shares in LY Corp.

On Wednesday, LY’s president, Takeshi Idezawa, told reporters in Tokyo that Naver and SoftBank were discussing their shareholdings in the app operator with the premise that SoftBank would take a majority stake.

Kang Dohyun, South Korea’s second vice technology minister, told reporter in Seoul that the Korean government had confirmed that the instructions to LY from Japan’s Internal Affairs and Communications Ministry do not specifically require Naver to reduce its stake in the company.

But he said Seoul regrets that the order was “being perceived as pressure” for Naver to do so.

“I would like to reiterate that the government is firmly committed to ensuring that our companies, including Naver, do not receive any disadvantages or unfair treatment in foreign businesses and investments,” Kang said. “We will respond sternly and strongly to any discriminatory measures taken against our companies.”

Since taking office in 2022, Yoon has focused on improving ties with Tokyo that had deteriorated due to longstanding grievances and strengthening mutual security cooperation with Japan and the United States in the face of North Korean nuclear threats.

Kang said the government would support whatever decision Naver makes about its stake in LY. If it decides to keep role in the joint venture, he said the technology ministry would help it strengthen its cybersecurity.