Presidential office vows to back Korean firms amid Naver-Line Yahoo saga

The presidential office is taking a firmer stance in support of Korean companies after facing criticism for laying down in front of Tokyo over the Naver-Line Yahoo sell-off directive.

A person passes by in front of Line Friends flagship store in Gangnam District, southern Seoul, on Monday, amid growing concerns over the Japanese government pressuring Naver to sell its stakes in Line Yahoo. [NEWS1]

The presidential office on Monday vowed to respond "firmly and strongly" to any unfair treatment of Korean companies with a priority on their interests in addressing the Japanese government's push to reduce the ownership of Line Yahoo (LY) by Korea's largest search engine, Naver.

The statement comes after criticism by lawmakers of the government's initial passive response to the situation.

A leak of personal data that affected users of the messaging app Line involving Naver Cloud's system in November led Japan's Ministry of Internal Affairs and Communications to issue an administrative guidance to Naver in March and April urging the company to consider selling its stake in LY.

LY is 64.5 percent owned by A Holdings, a 50:50 joint venture between Naver and SoftBank.

The Korean government's first official expression of "regret" came 20 days after Japan's second directive, on last Friday.

"The government's consistent stance is to prioritize the interests of our citizens and companies above all else," said Sung Tae-yoon, director of national policy at the presidential office, in a Monday briefing.

The government said it has conducted thorough consultation with Naver, and utilized diplomatic channels to understand Japan's stance, according to Sung. Since the massive data breach, the government has engaged in discussions with the Korean company on response strategies and awaits a decision from Naver based on its long-term strategic outlook.

Sung Tae-yoon, director of national policy at the presidential office, gives a briefing on Naver's potential scale down in Line Yahoo on Monday at the Presidential Office in central Seoul. [JOINT PRESS CORPS]

"Throughout this process, we've met with officials from Japan's Ministry of Internal Affairs and Communications to verify administrative directives, and have convened with Naver to share insights from the Japanese government, maintaining a tight line of communication," Sung said.

Sung stated that the government intends to provide "extensive support to enable Korean companies to make autonomous decisions without facing unfair treatment from foreign entities, " underscoring the determination to "respond firmly and decisively" to any unjust measures that contradict the will of Korean companies.

In what appeared to be a targeted response to opposition criticism of the government's handling of the situation, the director cautioned against political maneuvers that stoke anti-Japanese sentiment.

"It is clear that political narratives that fuel anti-Japanese sentiment raised by some undermine the national interest and fail to protect our companies or reflect the complexities of our bilateral relations," Sung argued.

Amid rising tension over the Naver-LY controversy, rival parties including the liberal Democratic Party (DP) have framed the situation as a diplomatic failure under the Yoon Suk Yeol administration. They criticized the government's handling of the issue as "appeasement and humiliation diplomacy,” citing unresolved issues such as compensation for victims of Japan's forced labor and the discharge of contaminated water at the Fukushima nuclear power plant.

"I was well aware of the Yoon Suk Yeol administration's appeasement diplomacy toward Japan, yet instead of standing against Japan's encroachment on Korean companies, the government is laying the groundwork [for Tokyo's approach]," Rep. Jung Chung-rae, a member of the DP's supreme council, said during a party meeting on Monday.

DP leader Lee Jae-myung took to Facebook on Saturday to criticize the government's response, highlighting familial ties between Takeaki Matsumoto, the Japanese communications minister, and Hirobumi Ito, the first Japanese resident-general of Korea during the colonial rule from 1910-45 that is considered the backbone of Korea's anti-Japan sentiment, in questioning the Korean government's stance.

Timeline of Naver-Line Yahoo ownership controversy [NAM JUNG-HYUN]

Critics suggest the government's passive response may stem from concerns about jeopardizing strides made in Seoul-Tokyo relations, considered a cornerstone of the Yoon administration's diplomatic efforts. The two nations have been intensifying their economic collaboration since last year, relaunching high-level consultative bodies.

President Yoon underscored there is "mutual trust" between himself and Japanese Prime Minister Fumio Kishida during a press conference marking his second year in office last Thursday.

"We trust each other sufficiently," Yoon said, adding, "We will exercise patience to the extent necessary."

Calls have emerged from the government for Naver to clarify its position.

"A clearer and more truthful stance from Naver would be most beneficial for government to help," an unnamed senior official from the presidential office told reporters Monday. "We anticipate a specific position from the company."

BY SEO JI-EUN [seo.jieun1@joongang.co.kr]