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Japan, ‘Personal information leaked’: Line Yahoo, “Reduce dependence on Naver capital”

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520,000 pieces of information leaked from Naver server
Unusual request to the president to revise capital relations
“Even if an accident occurs, we can’t respond because there are too many users.”
Naver “Already prepared measures to prevent recurrence”

The Japanese government demanded that LINE Yahoo, the operator of Japan’s ‘national messenger’ LINE, improve its management system, including a review of its capital relationship with its parent company, Korea’s Naver. It is very unusual for the Japanese government to request a specific company to reexamine its capital relationship.

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On the 5th, Japan’s Ministry of Internal Affairs and Communications summoned Takeshi Idezawa, CEO of Line Yahoo, and delivered an administrative guidance document pointing out the leakage of communication secrets under the Telecommunications Business Act and requesting revision of the capital relationship with Naver.

The Ministry of Internal Affairs and Communications also summoned the president of Softbank, Line Yahoo’s Japanese shareholder, and verbally requested that he appropriately review any requests from Line Yahoo. In the Japanese information technology (IT) industry, there is even an interpretation that the Japanese government wants Softbank to make additional investments in Line Yahoo or acquire a portion of Line Yahoo’s shares held by Naver to become the largest shareholder.

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Line Yahoo has a 64.4% stake in A Holdings, a joint venture in which Naver and Japan’s Softbank each own 50%. It operates Japan’s most widely used messenger line and Japan’s largest portal site, Yahoo. The number of people in Japan who use Line at least once a month amounts to 96 million.

The Japanese government believes that Line Yahoo has laxly managed personal information by outsourcing system development, operation, and maintenance to Naver. In October last year, it was revealed that 520,000 pieces of personal information may have been leaked through Line’s affiliate, Naver Cloud. It was also revealed that a Chinese developer was able to access personal information in the server during the process of entrusting artificial intelligence (AI) development work to a Chinese company in 2021.

The Japanese government mentioned that the authentication base of the Line system was jointly used with Naver and pointed out that “the strong dependence on Naver is a major factor (for poor management and supervision).” When Line Yahoo said it would take about three years to separate development and operations, the Japanese government said, “It is not enough to prepare technical measures,” and moved to reexamine the capital relationship itself.

However, it is unclear whether the review of capital relations desired by the Japanese government will actually take place. There is speculation that Softbank will have little room to make additional investments in Line Yahoo, whose market capitalization already amounts to 3 trillion yen (about 26.7828 trillion won).

In Japan, even the political circles are reacting sensitively. The Liberal Democratic Party’s Economic and Security Promotion Headquarters recently criticized Line, saying, “Even if an accident occurs, the number of users does not decrease, so we do not take serious action.” The Nippon Keizai Shimbun reported, “The reason the Liberal Democratic Party is sensitive to line security is because it is concerned about the spread of false information and manipulation of public opinion through social media this year, when major world elections are held.”

Naver’s position is, “We will actively cooperate with the Japanese government to strengthen the security system in the future together with Line Yahoo.” A Naver official said on the 6th, “Japan’s Ministry of Internal Affairs and Communications believes that the personal information leak incident that occurred on Line is due to the high dependence on Naver Cloud,” and added, “Line Yahoo has already strengthened network access management between Naver Cloud and Line and jointly operated between the two companies.” “We have prepared measures to prevent recurrence, such as separating the certification system, to eliminate risk factors,” he explained.

On the 6th, Line Yahoo announced that Chairman Kentaro Kawabe and others would voluntarily return part of their compensation, taking responsibility for the information leak and administrative guidance. Chairman Kawabe will return one month’s worth of 30% of his monthly basic salary, and President Idezawa and Chief Product Officer (CPO) Shin Jung-ho will each return three months’ worth of 30% of his monthly basic salary.


Tokyo =

Source: Donga

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