It is called the Line incident. Line, a messenger similar to WhatsApp, is a popular app in Japan. It is owned by Z Holdings, which is a subsidiary of SoftBank. SoftBank is a Japanese conglomerate that has investments in many companies, including Yahoo Japan. Yahoo Japan is a joint venture between SoftBank and Yahoo. Yahoo Japan is now called Z Holdings.

Japan, where the proportion of cash transactions is still high,
by 2026, they set a goal of lowering the proportion of cash payments below 60%.

As the convenience of pay was recognized along with the government’s push,
Japan’s cashless payment market has been growing rapidly.

In this process, Naver and Softbank, which were overwhelmed by the rapid growth of the cashless payment market, There was a head-on collision in the pay market. Softbank launched a campaign that gave back 20% of the payment amount with a limit of 10 billion yen.

Line Pay also launched a counterattack. In May 2019, Line announced that it would spend 30 billion yen to promote Line Pay.

As a result, Pay Pay, which was ranked 3rd in market share, rose to 1st place. and Line Pay rose from 4th to 2nd place.

However, in the process of competition, excessive costs were spent, and Naver and Softbank, merged Line and Yahoo with the intention of reducing unnecessary competition.
and taking advantage of the synergy effect.
Naver’s Line and Softbank’s Yahoo Japan merged to form Z Holdings.

The merger structure is as follows. Softbank holds 50% of the shares, and Naver holds 50% of the shares.

and Softbank is in charge of management. while Naver is in charge of technology.

As it does business in Japan, a Japanese company, is at the forefront to reduce controversy over Line’s governance structure.

However, as personal information leakage incidents occurred several times on Line, the Japanese government issued administrative guidance in March 2024 stating that a review of capital control relationships was necessary in order to establish a cybersecurity system,
and carry out normal management and supervision of consignment companies.

since Naver, which is entrusted with customer information management by Line Yahoo, is a joint majority shareholder of Line Yahoo along with Softbank and Line Yahoo, they are not properly managing and supervising Naver, and Naver should reduce its influence over Line Yahoo.

Lined Yahoo submitted a report that included the plan to separate the system from Naver by 2026, but the Japanese government judged that the plan was insufficient and issued a business improvement order to Line Yahoo.

Accordingly as a response to the information leak issue, Line Yahoo gradually terminated its consignment relationship with Naver and promoted technological independence.

The pressure on Naver to sell its stake appears to be a significant violation of the company’s property rights.

Reactions to the incident appear to be national in scope, with the South Korea government also issuing an official statement on the incident.