[Inside Chodong] Japan Eyes Korea's Digital Territory: 'LINE'

"I always thought that LINE would eventually be taken over by Japan. But it surfaced faster than I expected."

A venture capital industry insider, well-versed in investments in new industries such as artificial intelligence (AI), made this assessment of the LINE-Yahoo incident.

Although some time was bought due to backlash within Korea, in the long term, Naver will likely have no choice but to negotiate shareholding with Japan's SoftBank.

In this LINE-Yahoo incident, the Japanese government is outwardly emphasizing the protection of its domestic customer information and the need for technological and managerial independence.

Looking deeper, one can see Japan's ambition and urgency regarding data sovereignty and AI supremacy.

The Japanese national messenger 'LINE,' dominated by the Korean company Naver, has become a core infrastructure of Japanese society, used as a means for citizens to check on each other and communicate during earthquake situations.

With the entire population effectively 'locked-in' (lock-in: binding consumers to a specific product or service), there is a perception that data sovereignty has been taken away by Korea.

The anxiety over lacking data sovereignty and the desperation of not having a leading IT company to drive the future AI industry can be seen as the core of this LINE incident.

Currently, only four countries are considered to effectively hold data sovereignty: the United States, China, Korea, and Israel. This means only these four countries possess the data ecosystem that connects mega platforms, large language models (LLM), and AI.

Japan is not included in this group. On the other hand, Naver developed the large-scale language model HyperCLOVA X, a core AI technology, early on, and it is known to outperform OpenAI's GPT in Japanese language inference.

A data ecosystem based on domestic technological capabilities and platforms is regarded as a key factor determining national security, AI technology, and future national competitiveness.

A platform is territory. Without this digital territory, all information inevitably ends up being used without permission for model training by overseas companies such as Google, OpenAI, and Meta.

This is also why major countries are investing huge sums and deploying investment firms and corporations as vanguards to wage a 'digital war' to gain digital supremacy.

Recently, in the U.S., the Chinese IT company TikTok has become a battleground in the digital territory war, and in Europe, the American IT company Google is engaged in various lawsuits. Amid this rapidly evolving global digital supremacy war, our government's response remains complacent.

While the Japanese government, leveraging administrative power and massive capital (SoftBank), is pressuring Naver to sell shares according to a meticulous plan, the Korean government stood idly by and only belatedly joined the fray after being pushed by public opinion.

LINE is a mega platform with a cumulative user base of 1 billion. It is a rare global IT company with competitiveness that has expanded services such as internet banking, commerce, mobility, and delivery not only in Japan but also in Taiwan, Indonesia, and Thailand.

While our government is bewildered, if SoftBank acquires even a portion of shares from Naver and becomes the sole major shareholder of LINE-Yahoo, the control over the accumulated data, technology, personnel, and global network will pass to Japan.

LINE is a digital territory built with the technological prowess of the Korean IT company Naver. It is about to be taken away by Japan once again.