LY Corp., the operator of popular mobile messenger Line, has announced its plan to terminate its Line Pay service in Japan next year, amid criticism over Japan's apparent pressure to shed Naver Corp., South Korea's biggest internet portal operator, from LY.
LY, a 50-50 joint venture between Japan's SoftBank and South Korea's Naver, said Thursday the mobile payment service will be terminated by April 30, 2025, in Japan, citing "optimal allocation of management resources."
The company said some 44 million Japanese users of Line Pay will be able to transfer their balances to PayPay, a similar service provided by SoftBank, while its service will be continued in Thailand and Taiwan.
The decision was made to "selectively focus" management resources in the financial domain by "reorganizing" its business and "integrating" overlapping business areas to expand group synergies, the company explained in the announcement.
LY's announcement came a month after the company officially said it has been in talks with Naver over the possibility of changing their capital relationship following a data leak incident last year.
Earlier this year, Japan's Ministry of Internal Affairs and Communications issued an administrative guidance to LY regarding the incident, urging it to decrease its dependence on Naver apparently by handing over its stake to SoftBank.
In November last year, LY said over 300,000 records of its users' personal information were leaked after Naver Cloud Corp., Naver's cloud computing affiliate, came under cyberattack, as the two companies share a common authentication system.
Since then, LY has been taking various measures to lessen Naver's influence in the company, including the departure of Shin Jung-ho, a key South Korean executive, from its board.
Shin is known as the "father" of Line in South Korea as he developed the service at Naver in 2011.
Japan's actions drew criticism in South Korea, with many viewing them as an attempt to diminish foreign influence on the widely used online platform in the country.
LY is required to report to the Japanese government with detailed measures to lessen Naver's influence in LY by July 1, but is expected to not include the issue surrounding the Korean company's share. (Yonhap)
