Line Operator LY Corp. Receives Administrative Guidance; Stricter Supervision of Outsourcing Partner Urged Over Data Leak

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Administrative guidance was issued Tuesday to LY Corp., the operator of the free communication app Line, in connection with the possible leakage of Line users’ personal information.

The Internal Affairs and Communications Ministry is urging LY to supervise its outsourcing partner more firmly and to take thorough measures to prevent recurrence.

“I have decided to issue administrative guidance to ensure that users’ interests are protected,” internal affairs minister Takeaki Matsumoto said at a press conference following a Cabinet meeting on Tuesday morning.

The leaked information contained approximately 20,000 items defined as secrets of communication by the Telecommunications Business Law, including the dates and times of free calls.

According to LY, the former Line company’s computer system was illegally accessed from September last year, possibly leaking over 500,000 pieces of personal information on users and business partners.

A subsidiary of South Korean IT giant Naver Corp., to which LY outsources, was subjected to unauthorized access. The former Line, one of the companies that formed LY through a merger, was also compromised.

That is because the Naver subsidiary and the former Line company shared some bases for their computer systems.

Naver is effectively a major shareholder in LY, as it has established a 50-50 joint venture with major mobile phone operator Softbank Corp. The joint venture holds 64.5% of LY.

“There is a strong dependency on the company [LY] outsources to, and [LY] has not properly managed and supervised it,” Matsumoto said.

The administrative guidance may require the entire group to take action, including reviewing the shareholding structure between LY and Naver.

In 2021, a Chinese company to which the former Line company had outsourced system development was able to view users’ personal information.