Naver facing pressure to step back from Line by Tokyo

After a massive leak of user data from the messaging service, Naver is facing calls to cede control of the operating company, Line Yahoo.

Logos of Yahoo Japan and former Line Corporation [AP/YONHAP

Naver, a Korean portal giant that built the messaging app Line, is under pressure by the Japanese government to reduce its control over the messenger's operator that is now jointly owned by SoftBank through a Japan-based joint venture.

The two entered into a 50-50 joint venture called A Holdings that now owns a majority stake of 64.4 percent in Line Yahoo (LY), the operator of the internet portal Yahoo Japan as well as the messaging service, which is used by some 96 million users.

Line Yahoo has been ordered to submit a set of preventive measures and an implementation status by April 1 following a massive data leak of Line users in October. The government has also demanded that the company issue updates on its improvement efforts every three months for at least a year.

Tokyo's Internal Affairs Ministry cited a “strong dependence on Naver” for system and network configuration as a key factor behind the data breach last week, and asked the company to review its capital relationship with the Korean company.

About 510,000 pieces of personal information about users, business partners, employees and other personnel may have been leaked through Line’s subcontractor Naver Cloud, according to Line Yahoo last month.

The company is working to prevent reoccurrences in the future through “strengthening contractor management, mitigating and fortifying protections against the risks associated with our systems and networks, and enhancing the security of our employee systems.”

However, the ministry's request to review its capital relationship with the parent company was not directly mentioned in the disclosure.

Line Yahoo’s three executives voluntarily decided to return a chunk of their monthly salaries for up to three months to take responsibility for the data breach.

"Naver will be cooperative in taking active measures to prevent future accidents,” a Naver spokesperson briefly told the Korea JoongAng Daily. The spokesperson declined to comment on shedding its majority stake in Line Yahoo, or whether there were requests from the Japanese operator regarding the matter.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]