To Prevent 'Line Incident' Concerns... Ministry of SMEs Supports Startups with Legal Assistance

'Legal Support for Startups Expanding Overseas' Promotion
Collaboration with Major Domestic Law Firms
Startups Concerned About Local Business Due to 'Line Incident'
Oh Young-joo: "We Will Ensure No Disadvantages for Our Companies"

The Ministry of SMEs and Startups has rolled up its sleeves to support domestic startups in expanding overseas. First, it will provide free legal assistance to help startups settle well in local markets. This is expected to be a timely relief for startups that urgently needed local legal support following the recent 'Line incident' in Japan.

On the 13th, the Ministry announced at the 'Japan Expansion Startup Meeting' that it will launch 'Legal Support for Overseas Expansion Startups' in July. The plan involves collaborating with major law firms possessing relevant expertise to help resolve local laws and regulatory issues, aiming for the successful overseas expansion and settlement of startups. The meeting was organized to discuss policies needed by startups expanding into Japan, with 10 startups participating.

Oh Young-joo, Minister of SMEs and Startups, is delivering a greeting at the meeting with startups entering the Japanese market held in Seoul on the 13th. (Photo by Ministry of SMEs and Startups)

So far, startups expanding overseas have requested support in resolving various legal issues arising in business processes such as corporate establishment and customs clearance. In response, in February, President Yoon Suk-yeol instructed, "The Ministry of Justice, Ministry of SMEs and Startups, and the Korean Bar Association will consult to devise a legal support plan for startups," adding, "Especially, prepare an online legal support system immediately."

Looking into the details of this support measure, major law firms such as Kim & Chang, Bae, Kim & Lee LLC, and Lee & Ko are expected to provide assistance. The supported countries include eight nations such as the United States, Japan, and China, with each firm offering up to 10 legal consultations per month or within a budget of 10 million KRW per month. Each law firm will utilize overseas offices and foreign law specialists to provide consultations across various fields. The cost is being considered to be borne directly by the law firms as part of their social contribution.

In particular, through this support, domestic startups that recently expanded into Japan are expected to alleviate concerns caused by the 'Line incident.' Last year, Naver faced a crisis due to a hacking incident involving the personal information of 520,000 Line users, putting its Japanese Line business at risk of closure.

In this context, startups expanding into Japan have been moving to strengthen personal information protection, but have struggled with the different legal systems compared to Korea. Moreover, hiring local law firms to respond is financially challenging for startups taking their first steps in business. In fact, at the 'Japan Expansion Startup Meeting' organized by the Ministry on the 13th, participants expressed concerns that the impact of the 'Line incident' is still ongoing.

Park Ha-min, COO of Mediquoters Japan Business Division, said, "As we grow our business, we want to receive investments from local venture capitalists (VCs), but the Line incident made us think that 'there could be problems when money comes in from Japan.'"

Choi Hyuk-jae, CEO of Spoon Radio, also stated, "(The Japanese government) could find fault for any reason in the future. Our company is under significant threat as this issue affects our sales and survival," adding, "When meeting investors, we have started to receive questions like 'What will you do if regulations like this start in Japan?'"

Yoon Ye-chan, CEO of Scala Data, said, "Recently, the question 'What do you think about the Line incident?' has effectively become the closing remark in meetings," adding, "The Line incident was ultimately a problem related to Japan and Line's data privacy. Since our business model is also a platform business, even with good preparation, there is a risk of involuntary and unavoidable security issues arising, so we are curious about how to respond."

In response, Minister Oh Young-joo of the Ministry of SMEs and Startups emphasized, "There has been recognition that startups expanding overseas, not only in Japan, need legal support, and starting next month, we will collaborate with major law firms to help resolve legal issues faced by startups going global," adding, "We will strive to ensure that our companies do not suffer disadvantages abroad."