SEOUL — Naver Corp. CEO Choi Soo-yeon announced on Tuesday that the company has no immediate plans to divest its stake in LY Corp., the Japanese operator of the popular messaging app Line, despite LY’s efforts to reduce its reliance on Naver. This declaration comes amidst ongoing discussions about the future capital structure between Naver, LY, and their stakeholders.
According to Yonhap News Agency, while there are no short-term plans to sell Naver’s stake, the company remains non-committal about its mid-to-long-term strategies. Naver, a major internet portal operator in South Korea, currently holds a 50 percent stake in A Holdings, LY's parent company, with the remaining shares held by Japan's SoftBank Group. Choi’s remarks were made during a session with the parliamentary science and communications committee, closely following LY's submission of a report to the Japanese government detailing plans to overhaul its security systems after a significant data breach last year.
LY’s report outlined an accelerated timeline for severing its technical and network integrations with Naver and Naver Cloud Corp. by March 2026 and aims to end its outsourcing relationships with these entities by the end of next year. Despite these changes, LY noted that both Naver and SoftBank are facing challenges with immediate capital restructuring but are committed to ongoing discussions about their investment relationship.
The reevaluation of the partnership began following administrative guidance from Japan's Ministry of Internal Affairs and Communications, which pressured LY to decrease its dependency on Naver after more than 300,000 user records were compromised during a cyberattack on Naver Cloud. The incident highlighted vulnerabilities within the shared authentication systems of Naver and LY.
These developments have spurred LY to implement measures aimed at reducing Naver’s influence, highlighted by the departure of Shin Jung-ho from its board. Shin, a pivotal figure in the creation of Line at Naver in 2011, was particularly influential in the app’s development and integration within the company’s portfolio.
The scrutiny and subsequent restructuring efforts by LY have not only been a focal point of corporate governance but have also stirred nationalistic sentiments in South Korea, where many perceive Japan’s actions as an attempt to diminish foreign influence on a platform that serves approximately 78 percent of Japan’s population.