Seoul urges ‘no discrimination’ by Japan over Naver’s Line app

Seoul has urged Tokyo not to discriminate against South Korean companies, the foreign ministry told AFP Monday, after reports that tech giant Naver is under pressure to sell its stake in Japan’s top messaging app.

South Korea’s Naver developed Line 13 years ago and it now has more than 95 million users. It is also popular in Taiwan and Southeast Asia.

The app is operated in Japan by LY Corp, which is majority-owned by A Holdings, a joint venture between Naver and Japanese investment firm SoftBank.

Last week, Japanese reports said Tokyo had demanded LY Corp review its relationship with Naver, with the Kyodo news agency saying SoftBank was in talks to buy Naver’s LY Corp shares.

“We maintain a firm stance that there should be no discriminatory measures against South Korean companies,” the foreign ministry said in a statement, which it sent to AFP on Monday.

Seoul plans to discuss the matter with Naver “if necessary”, it told AFP.

Line has been under scrutiny in Japan over a data leak involving more than 500,000 records last year, which prompted Japan’s communication ministry to issue administrative guidance.

Line’s “strong dependance on Naver in terms of systems and network configuration” was among the causes of the leak, the ministry said, according to the Japan’s Nikkei.

“This relationship has also made it difficult for your company to demand appropriate safety measures from Naver and to implement proper management,” it said, referring to LY Corp.

One of South Korea’s biggest tech companies, Naver’s myriad services — including Google-like maps, financial services similar to Apple Pay, and popular blogs and chat forums — are used daily by many Koreans.

The unfolding situation is a “mismatch” for South Korean President Yoon Suk Yeol, who has been trying to improve ties with Japan in the face of military threats from North Korea, Kim Dae-jong, professor of business at Seoul’s Sejong University said.

“Under global standards, countries do not demand companies forsake their shares — just like we don’t demand Facebook sell theirs over privacy concerns. Japan should follow such standards.”

But Seoul is not in position to block the deal as it does not involve national security, he said.

Naver declined to comment on the matter.