SoftBank Pauses Line App Stake Increase Amid S. Korea Concerns

TOKYO, Japan - SoftBank Corp. has temporarily suspended plans to increase its stake in LY Corp., the operator of the Line messaging app, according to a report by the Asahi Shimbun newspaper on Wednesday.

The move would have reduced the influence of South Korean technology company Naver Corp., which currently shares equal ownership with SoftBank in A Holdings Corp.

This intermediate holding company controls 64.5% of LY.

This decision follows March administrative guidance from Japan's Ministry of Internal Affairs and Communications, which directed LY to review its capital relationship with Naver after a significant data breach in 2022.

However, the Ministry of Internal Affairs and Communications's administrative guidance faced opposition in South Korea, leading to SoftBank's current stance, Asahi reported, citing a source close to the company.

Despite the pause, SoftBank reportedly intends to pursue increased ownership in LY over the medium to long term, aiming to establish it as a "homegrown digital service platform," according to the source.

LY, formed through the merger of Line Corp. and Yahoo Japan Corp. in October, has committed to completely separating its systems from Naver by March 2026 as part of measures to prevent future information leaks.

The Ministry of Internal Affairs and Communications has reportedly softened its stance on LY's ownership review, potentially due to diplomatic considerations and concerns about straining recently improved Japan-South Korea relations.