South Korea to Consult Naver, after Report Firm Faces Japan Pressure to Divest Stake

Reuters

17:36 JST, April 27, 2024

SEOUL (Reuters) – South Korea said on Saturday it will consult with Naver 035420.KS, after media reported that the domestic internet company was under pressure from Japan to divest from a venture, adding that its companies should not face discrimination.

The South Korean foreign ministry was asked to respond to a Kyodo news agency report earlier this week that Japan’s SoftBank Group 9984.T was in talks to buy shares of LY Corp 4689.T from Naver after administrative guidance from Japan’s internal affairs and communications ministry over a data leak last year.

“The Korean government is firmly in the position that there should be no discriminatory measures against our companies. We will check Naver’s position on the case and communicate with Japan’s side if necessary,” the ministry said in a statement.

LY Corp is majority owned by A Holdings, a joint venture between SoftBank and Naver, and operates Line, a messaging app popular in Japan and elsewhere in Asia.

The media report prompted concerns in South Korea over possible political interference, with two incoming lawmakers from the Rebuilding Korea Party urging the South Korean government to take “strong action.”

Japan’s internal affairs and communications ministry and SoftBank Group did not immediately reply to Reuters’ requests for comment.

LY Corp said earlier this month it received another administrative guidance following one in March from the ministry which said to accelerate “discussions on essential review of security governance involving the entire group, including the parent company.”

In November last year, the company admitted unauthorized access of its systems by a third party via Naver Cloud’s system which led to information leakage of more than 300,000 records of personal data about Line users among others.

Naver is cooperating with LY Corp to strengthen security, a representative said.