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Tech Japan and South Korea locking horns over LINE app

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In 2019, Naver from South Korea and SoftBank Group from Japan formed a joint venture, a symbol of cooperation despite diplomatic tensions. They co-owned the operator of Line, a messaging app developed in South Korea and popular in Japan under the project name Gaia. Five years later, while Japan and South Korea have improved their historical relations, a dispute over the ownership of the Naver-SoftBank venture has arisen, potentially straining ties between the two nations.

The messaging platform Line, launched in Japan by Naver in 2011, became crucial after the Tohoku earthquake and tsunami disrupted phone lines, allowing communication via the internet. Known for its popular stickers, Line has grown into Japan's leading messaging app with millions of users, expanding into Thailand, Taiwan, and Indonesia. In 2019, SoftBank's Masayoshi Son and Naver's co-founder Hae-Jin Lee formed a joint venture to operate Line, dubbed the "Son-Lee alliance," amid tense Japan-South Korea relations.


LINE app


Late last year, cracks started opening in the Naver-Softbank venture. Line's operator, LY Corporation, said in November that a third party had gained unauthorized access to its systems via Naver's cloud storage system. In turn, Japan's communications ministry issued an ambiguous statement widely interpreted as a directive to Naver to sell its stake in its joint venture. In South Korea, the move caused a stir. Some analysts and politicians interpreted it as an attempt by Japan to use political pressure to undermine Naver, one of South Korea's biggest companies. Naver's union said it opposed any sale, and the company's chief executive, Choi Soo-Yeon, said she found the Japanese government's directive "highly unusual." [...] How Japan ultimately handles the issue of Line's ownership may affect the broader trajectory of Japanese-Korean relations, said Yul Sohn, president of the East Asia Institute, a think tank in Seoul. "From the Korean side, the general public believes that the Yoon government has shown its intentions and the cup is still half empty and waiting for Japan to respond," he said. If Japan shows it is willing to reciprocate, even through a gesture like a concession related to the dispute over Line, Mr Yoon could use that to manoeuvre further cooperation, Mr Sohn said.


 
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