Line Yahoo "Accelerates System Separation"... Speeding Up 'Erasing Naver' (Comprehensive)

System Separation Accelerated for Completion Within the Year
Service Area Also Parting Ways with Naver
Negotiations for Share Sale Amid Naver Influence Reduction

Line Yahoo is accelerating its severance of ties with Naver. The company plans to expedite the system separation timeline and halt service collaboration as soon as possible. Amid discussions between Naver and SoftBank over the sale of Line Yahoo shares, Naver's influence within Line Yahoo is rapidly diminishing.

On the 18th, Takeshi Idezawa, CEO of Line Yahoo, stated at the regular shareholders' meeting held at Line Yahoo headquarters in Tokyo, Japan, "We will complete the separation work of employee systems and authentication, which were entrusted to Naver Cloud, within this year."

Until now, Line Yahoo had outsourced system development, operation, and maintenance to Naver Cloud. Although the original plan was to separate systems from Naver by 2026, this timeline is being moved forward.

In the service domain as well, the company intends to terminate outsourcing relationships. CEO Idezawa explained that this includes ending cooperation with Naver in website search development and authentication for the Japanese portal site 'Yahoo Japan,' and that outsourcing relationships with Naver will be terminated in almost all Japanese business areas.

At the shareholders' meeting, Line Yahoo passed a resolution to exclude Shin Jungho, Naver's Chief Product Officer (CPO) known as the 'Father of Line,' from the board of directors. The board composition changed from four internal directors and three external directors to two internal directors and four external directors. Consequently, the board is now composed entirely of Japanese members.

However, there was no specific mention regarding the share sale issue. The largest shareholder of Line Yahoo is A Holdings, which holds 64.5% of the shares. Naver and SoftBank each hold 50% of A Holdings' shares. CEO Idezawa said, "Nothing has been decided yet," adding, "If any facts requiring disclosure arise, including a review of capital relationships, we will inform immediately."

Industry insiders view this as Line Yahoo reaffirming its intention to distance itself from Naver. As SoftBank and Naver discuss changes in Line Yahoo's shareholding, Naver's presence within Line Yahoo is fading. On the 4th, Naver announced the dissolution and liquidation of 'Line Biz Plus,' which handled Line Yahoo's fintech operations. On the 13th, Line Yahoo announced the termination of the Japanese service of the simple payment service 'Line Pay.' This business will be transferred to SoftBank's other simple payment service, 'PayPay.'

The market's attention is focused on the improvement plan that Line Yahoo will soon submit to the Japanese government. The Ministry of Internal Affairs and Communications of Japan has ordered Line Yahoo to submit the second administrative guidance-related improvement plan by the 1st of next month. At the time of the plan's submission, there may be mentions or outlines regarding share adjustments. The Japanese government's response to the report will also be a variable affecting the pace of negotiations. If the Japanese government, which pressured Naver to sell shares, insists on adjusting shareholding relationships in response to Line Yahoo's stance, Naver's options may be limited. However, Naver maintains its principle of conducting discussions in a way that is most advantageous to its business competitiveness.

Meanwhile, SoftBank is preparing for its shareholders' meeting scheduled for the 20th. SoftBank Chairman Masayoshi Son is expected to attend and reveal detailed plans related to artificial intelligence (AI) investments. There is keen interest in whether any remarks regarding the Line Yahoo situation will be made.