Published: Friday, May 24, 2024
SEOUL, South Korea – South Korea pledged Friday to protect companies that operate in other markets, after Japanese regulators asked LY Corp. to reduce its reliance on Naver, its Korean partner, in a joint venture to run the popular chat application Line.
After a major breach of security at Naver’s cloud computing servers, friction over Naver’s 50% stake in LY, a joint venture with Japan’s SoftBank, emerged last year. After the leaked of over 300,000 records including Line user information, the Japanese side told LY that it needed to improve its governance, and rely less upon Naver.
Several Korean politicians claim that Japan has pressured Naver to lower its stake in LY by demanding President Yoon Suk Yeol’s government take a stern stance towards Tokyo.
After Naver announced that it would be discussing “all options” with SoftBank, including the sale of its shares in LY Corp. with SoftBank, a senior official from the Korean Technology Ministry spoke to reporters on Friday.
Takeshi Idezawa told reporters on Wednesday in Tokyo that Naver, SoftBank, and LY were discussing the shareholdings of the app operator, with the assumption that SoftBank would acquire a majority stake.
Kang Dohyun (South Korea’s second Vice Minister of Technology) told a reporter in Seoul that the Korean Government had confirmed that instructions from Japan’s Internal Affairs and Communications Ministry to LY did not require Naver to reduce their stake in the company.
He said that Seoul regretted the fact that Naver was under pressure to obey this order.
Kang stated, “I want to reiterate the government’s firm commitment to ensure that our companies including Naver do not suffer any unfairness or disadvantages in foreign business and investments.” “We will take stern and strong measures against any discriminatory actions taken against our company.”
Yoon, who took office in 2022 has been focused on improving the ties between Tokyo and Seoul that have deteriorated over the years due to long-standing grievances. He also wants to strengthen the mutual security cooperation of Japan and the United States against the North Korean nuclear threat.
Kang stated that the government will support any decision Naver takes about its stake in LY. He said that if it decided to retain its role in the joint-venture, the Technology Ministry would help strengthen the cybersecurity.