LINE Yahoo, the operator of the popular messaging app LINE in Japan, is accelerating its efforts to cut ties with Naver, its South Korean parent company. In a shareholders' meeting held on June 18, LINE Yahoo CEO Takeshi Idezawa announced that the company will "terminate outsourcing relationships with Naver in almost all domestic service business areas in the service business domain."
This means that LINE Yahoo will take over the operation of LINE-developed services such as LINE Pay and LINE Wallet, which were previously outsourced to Naver. The company had originally planned to complete the system separation by 2026, but is now considering ways to expedite the process.
LINE Yahoo explained that it is "reviewing the nature of the work entrusted to Naver" and that "while it is not in a position to make a decision regarding changes in the capital relationship, it is requesting that its parent company (SoftBank) and others review the matter."
The company added that "there is nothing decided at this point," but that "if there are any facts that need to be announced, including a review of the capital relationship, we will announce them promptly."
Background of the Severance from Naver
LINE Yahoo was severely impacted by a customer information leak incident that occurred at Naver Cloud in March. Following the incident, the company was also urged by the Japanese government to review its capital relationship with Naver.
In response, LINE Yahoo is seeking to escape the crisis by distancing itself from Naver. There are speculations that the company may even pursue changes to its capital relationship in addition to terminating outsourcing contracts with Naver.
Impact of "De-Naverization"
LINE Yahoo's "de-Naverization" is expected to have a significant impact on the Japanese IT industry. LINE is the most popular messaging app in Japan, with tens of millions of users. There are concerns that if LINE Yahoo terminates its outsourcing contracts with Naver, it could affect LINE services.
However, LINE Yahoo plans to address these concerns through system separation and self-development of services. The company also appears to be committed to growing as an independent company in the Japanese market.
Future Outlook for LINE Yahoo
Can LINE Yahoo overcome the crisis and establish itself as an independent company in the Japanese market through its severance from Naver? The company's future moves will be closely watched.
