Japanese Authorities Begin Pressuring "Share Sale"
Follow-up Administrative Measures After "Reevaluating Capital Relationship with Naver" Guidance
Due to a large-scale information leak issue, the mobile messenger application LINE's operator, Line Yahoo, which received administrative guidance from the Japanese government, has reportedly decided to reconsider outsourcing work to Naver, the cause of the information leak, according to local reports.
According to a report by Japan's public broadcaster NHK on the 29th, Line Yahoo stated that while confirming the impact on LINE users, it has decided to proceed with a detailed review aimed at reducing the outsourcing of tasks related to information and communication (IT) infrastructure to Naver.
Earlier, on the 5th, Japan's Ministry of Internal Affairs and Communications pointed out that Line Yahoo excessively depended on Naver, a major shareholder to which system operations were outsourced, and that cybersecurity measures were insufficient. Through administrative guidance, the ministry demanded improvements in the management system, including a "reexamination of the capital relationship with Naver."
Additionally, the ministry instructed Line Yahoo to report measures to prevent recurrence by the 1st of next month.
Currently, about 65% of Line Yahoo's shares are held by A Holdings, a joint venture established by Naver and SoftBank. SoftBank and Naver each invest 50% in A Holdings.
NHK reported that since the Japanese government is also demanding a review of the capital relationship with Line Yahoo, Line Yahoo plans to hold consultations with Naver together with SoftBank.
In this regard, Kyodo News reported that Line Yahoo plans to completely separate its system infrastructure from Naver over a maximum period of about three years, and that the Ministry of Internal Affairs and Communications is also requesting SoftBank to expand its management involvement.
In November last year, Line Yahoo announced that "there is a possibility that 440,000 pieces of personal information of LINE users, clients, and employees were leaked," and revealed that unauthorized third-party access occurred through its affiliated company, Korean Naver Cloud.
At that time, Line Yahoo explained that an employee of a company outsourced together with Naver Cloud was subjected to a cyberattack, and as a result, damage also occurred to Line Yahoo, which shares some systems with Naver.
Subsequent investigations revealed that an additional 79,000 pieces of personal information might have been leaked, increasing the total damage scale to over 510,000 cases.
LINE is the most widely used messenger app in Japan. The number of people who use LINE at least once a month in Japan reaches 96 million.
Naver was the parent company of the operator when the LINE service launched in 2011. Since then, it has been entrusted with the development, operation, and maintenance of some LINE systems.
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