South Korea Backs Naver in Business Rift with Japan Over Line App

In response to Japanese regulatory pressure, South Korea has affirmed its commitment to defend its businesses, particularly Naver, as tensions over Line's operational independence intensify.

Growing Tensions Over Tech Partnerships

AP News reports that South Korea promised on Friday to protect its companies that do business in other countries after Japanese regulators told LY Corp., the company behind the famous chat app Line, to depend less on Naver, its Korean partner in the venture.

The conflict stems from Naver's 50% ownership in LY, a joint venture with SoftBank of Japan. This ownership was scrutinized following a significant security breach at Naver's cloud computing servers last year. The leak of over 300,000 records, including user data for Line, prompted the Japanese government to direct LY to strengthen its administration and reduce its dependence on Naver.

Some Korean politicians say Japan is pressuring Naver to cut its stake in LY, which means President Yoon Suk Yeol's government must be strict with Tokyo.

Seoul's Response to Japanese Directives

On Friday, a senior official from the Korean Ministry of Science and Technology talked to reporters after Naver said it was talking with SoftBank about "all possibilities," including selling its shares in LY Corp.

Takeshi Idezawa, president of LY, informed reporters in Tokyo on Wednesday that shares in the app operator were being discussed between Naver and SoftBank, with the understanding that SoftBank would acquire a majority position.

The second vice minister of technology for South Korea, Kang Dohyun, informed reporters in Seoul that the Korean government had verified that the directives given to LY by the Japanese Ministry of Internal Affairs and Communications do not directly demand that Naver sell its company shares.

Kang stated that Naver's decision regarding its ownership of LY would have the government's backing. He said the technology ministry would assist it in strengthening its cybersecurity if it chooses to maintain its involvement in the joint venture.

Strategic Decisions Ahead for Naver and LY

In reaction to Japan's guidelines, LY Corp is also ending its outsourcing to Naver, according to Reuters. SoftBank made this announcement at a presentation.

The government of South Korea declared last month that it is in consultation with Naver and that Korean enterprises should not face any discriminatory treatment. Trade conflicts between Japan and South Korea have resulted from historical animosity between 2019 and last year; however, relations are improving under the present administration.

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