Line Yahoo to expedite Naver separation for completion within next year

The Tokyo-based operator behind Line will accelerate plans to sever ties with Naver in a move to comply with calls from Tokyo.

Line Yahoo's office building in Tokyo [YONHAP]

Line Yahoo, the Tokyo-based operator behind Line, will accelerate the timeline to separate its system from Naver in response to the Japanese government’s call for the company to split from the Korean portal.

Line Yahoo (LY) CEO Takeshi Idezawa said on Tuesday that the company is aiming to complete the separation of employee systems and authentication managed by its subcontractor Naver Cloud by March 2025.

“We initially planned to complete the system separation from Naver by 2026, but we will formulate plans to expedite this process,” Idezawa said at the general shareholder meeting in Tokyo.

The deadline originally set was December 2026, according to LY’s report in April.

“We also aim to terminate almost all outsourcing relationships with Naver for our domestic services,” Idezawa added.

The primary outsourcing collaboration with Naver involves the development of search functionality for the Yahoo Japan portal, LY explained.

Specific plans related to the enhancement of cybersecurity governance will be announced next month.

The CEO, however, did not address the matter of reviewing capital ties with Naver at the meeting, a topic of heightened interest to both nations since the involved parties announced that discussions were underway that may involve Naver’s divestment of its stake in LY.

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

Japan’s Ministry of Internal Affairs and Communications issued an administrative guidance in March and April requesting that LY reduce its reliance on the Korean company, including capital ties, and come up with specific measures by July 1.

The pressure was sparked by a data breach incident in October that resulted in the leak of some 510,000 items of personal information about users, business partners, employees and other personnel through Naver Cloud. In line with the guidance from Tokyo, LY has been making moves to extricate its business from the Korean company in all aspects of the business and cybersecurity sectors. Last Thursday, LY announced via an electronic disclosure that its mobile payment service Line Pay, developed by Naver, will close in Japan by April 30, 2025. After the service termination, users may transfer their balances to PayPay, another mobile payment service that was developed by SoftBank and Yahoo Japan. Shin Jung-ho, LY’s chief product officer and the sole Korean member of its board of directors, resigned as an internal director at the general shareholder meeting on Tuesday. The Korean government stated last month that matters regarding equity sales will not be included in the July 1 report, but discussions related to stake divestment are expected to continue. SoftBank is scheduled to hold a general shareholder meeting on Thursday, and matters involving the relationship between LY, Naver and SoftBank are expected to be addressed.

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