South Korea has pledged to safeguard its companies operating in foreign markets following a directive from Japanese regulators to LY Corp., the operator of the Line chat app, to reduce its reliance on Korean partner Naver. The friction arose after a security breach at Naver's cloud computing servers last year, prompting Japan to urge LY to enhance its governance and lessen its dependence on Naver.
Amid accusations from Korean politicians that Japan is pressuring Naver to reduce its stake in LY, discussions are ongoing between Naver and SoftBank, the Japanese partner in the venture, regarding potential share adjustments. LY's president indicated that SoftBank might acquire a majority stake in the company.
South Korea's technology ministry clarified that Japan's instructions to LY do not explicitly mandate Naver to decrease its ownership in the venture. However, Seoul expressed regret that the directive could be perceived as pressure on Naver. The government emphasized its commitment to ensuring that Korean companies, including Naver, are not subjected to unfair treatment in foreign business dealings.
President Yoon Suk Yeol's administration has prioritized improving relations with Tokyo and enhancing security cooperation with Japan and the United States in response to North Korean nuclear threats. The South Korean government affirmed its support for Naver's decision regarding its stake in LY, offering assistance in strengthening cybersecurity measures if Naver opts to maintain its role in the joint venture.
