SoftBank Corp. is currently negotiating with Naver Corp. regarding the latter’s stake in LY Corp., the entity behind the popular Line messaging app. Junichi Miyakawa, CEO of SoftBank, revealed during a recent earnings briefing that discussions are underway for Naver to reduce its capital control. This move comes in response to significant pressure from the Japanese government following a serious data breach last November.
LY Corp., majority-owned by A Holdings—a joint venture between Naver and Japan’s SoftBank—has been under scrutiny after its systems were compromised, leading to a substantial leak of user information. The incident has catalyzed the Japanese government to demand a reduction in Naver’s influence over LY’s operations, particularly concerning its IT infrastructure.
The strategic shift aims to address security concerns by decreasing reliance on Naver for system and network configurations, which were highlighted as vulnerabilities during the breach. Takeshi Idezawa, CEO of LY, emphasized the company’s request to Naver to alter the nature of their capital relationship to enhance management independence and security governance. This includes the planned resignation of Jungho Shin, LY’s chief product officer and key figure in Line’s initial success, from the board, although he will continue as CPO.
As SoftBank and Naver navigate these discussions, Naver’s CEO Choi Soo-yeon expressed readiness to comply with Japan’s requests but remains undecided about the future relationship with LY. Both companies aim to reach a resolution by July, with implications for the control and security of one of Asia’s leading communication platforms.
