Wednesday, June 12, 2024

The administrative guidance given by Japan’s General Affairs Ministry to Line became a conflict between Korea and Japan


Line is a mobile messenger released in June 2011 by Naver Japan, a Japanese subsidiary of Korean portal site Naver Inc. Looking at the governance structure of Line, 50% is for Naver and 50% is for Softbank. The program was developed by Naver, but management rights are actually held by Softbank. The background of Softbank Co., Ltd.’s purchase of a stake in Line Yahoo is the Line personal information leakage accident. In November 2023, Naver Cloud Data Center was hacked, and the personal information of Line users reached 510,000.


Japan’s Ministry of Internal Affairs and Communications has given administrative guidance on personal information leakage accidents. The Ministry of Internal Affairs and Communications points out that Line Yahu relies excessively on Naver, which has entrusted system work, and cyber security measures are insufficient. At the same time, it gave administrative guidance calling for improvement of the management system. This administrative guidance is not unusual. Usually, when a hacking accident occurs, the government demands supplementary measures and imposes fines. However, this Line incident requires companies to liquidate their shares. This is extremely rare for the government to interfere with private company contracts.


As Naver announced that it would not sell its stake, it also demanded that the Korean government not take unreasonable measures against Japan. In particular, Naver expressed its intention to maintain its current governance structure in a report to be submitted to Japan soon.

If there is a problem with a company, the country should protect it. It is difficult for companies to ignore demands from the government. It will be necessary to control how far the government or politicians should intervene in the management of a company. Conflicts between governments should not hurt corporate employees.




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