Saying LINE was handed over to Japan is half right. More precisely: not a single share changed hands. What moved was the systems and the people.
In January 2026, reports indicated SoftBank had suspended its review of the LINE Yahoo capital relationship. Naver and SoftBank each still hold 50% of A Holdings, LINE Yahoo’s parent. The “capital relationship review” the Japanese government pushed for two years ultimately went nowhere.
And yet, over that same period, the inside of LINE Yahoo changed completely.
It started with control, not ownership
A common misconception needs clearing up first. Operational control of LINE Yahoo did not shift in 2024. It sat with SoftBank from the 2019 merger agreement onward.
- 2011 — Naver’s Japanese subsidiary launches LINE, right after the Tōhoku earthquake, as a service selling connection when networks failed.
- November 2019 — Naver’s LINE and SoftBank’s Yahoo Japan announce a management integration.
- March 2021 — The joint venture A Holdings launches. Naver 50, SoftBank 50. Below it, Z Holdings; below that, Yahoo Japan and LINE.
- October 2023 — Z Holdings, LINE and Yahoo merge into LY Corporation.
Ownership was equal, but board composition and day-to-day operations were SoftBank-led. Naver sat closer to a financial partner, collecting roughly ₩836.8 billion in annual dividends — about ₩1.5 trillion over four years.
November 2023: 510,000 records
A security incident broke the balance. In November 2023, a Naver Cloud partner was breached, exposing roughly 510,000 LINE users’ personal records.
Japan’s Ministry of Internal Affairs and Communications responded fast, and broadly.
- March 2024 — First administrative guidance, demanding management-system improvements.
- April 2024 — Second guidance. This is where the phrase “capital relationship review” appears: a remedy for a security failure that reached into the ownership structure.
Why this became contentious in Korea is straightforward. Critics argued at the time that requiring a foreign shareholder to unwind its stake as remediation for a technical incident exceeds ordinary supervisory scope.
June 2024: the last Korean left the board
The pressure produced results in personnel before ownership.
At the June 2024 shareholders’ meeting, Shin Jung-ho, LY’s chief product officer and its only Korean board member, was removed and replaced by a Japanese executive. With the architect of LINE gone, the board became entirely Japanese.
Around the same time LY’s CEO said technical ties with Naver would be severed within the year, and LINE Pay was wound down and transferred to a SoftBank entity.
In July 2024, LY reported to the ministry that “short-term capital movement between the two companies is currently difficult.” Stake-sale talks effectively stopped there.
March 2025: the wiring was cut
While the ownership talks stalled, the operational separation finished. The report LY filed on March 31, 2025 is specific.
| Area | Change |
|---|---|
| Systems, authentication, network | Comprehensive disconnection from Naver and Naver Cloud |
| Security operations center | Transferred to Japanese operators, 24/7 structure |
| Data centers, account management | Converted to Japan-led operations |
| Overseas subsidiaries | LINE Plus (Korea) and others separated by March 2026 |
| Internal collaboration suite | Naver Works → Google Workspace |
| AI services | Naver Clova → OpenAI models |
The last two rows capture the nature of this best. LINE no longer runs on Naver’s AI or Naver’s collaboration tools. The ownership percentage is unchanged, yet Naver has disappeared from the technology stack.
What Naver is left holding
LINE Yahoo’s market capitalization was roughly ¥3.72 trillion (about ₩36.6 trillion) as of 2025. A Holdings owns 64.5% of LINE Yahoo, and Naver owns half of A Holdings.
On paper that is not bad. The dividends keep arriving. But there is no channel left for influencing decisions. No board seat, no technical integration, no point of entry into the service roadmap.
Whether keeping 50% counts as a successful defense turns on that distinction. Preserved as an asset; lost as a business.
Why the talks stopped
The reason SoftBank could not simply buy out Naver is unglamorous. Cash.
SoftBank has committed to large-scale investment in OpenAI. Given LINE Yahoo’s valuation, acquiring Naver’s half of A Holdings requires cash in the trillions of won, and that cash is already allocated. This funding constraint sits behind the stalled acquisition talks.
So today’s 50-50 is not the product of agreement. It is a failed negotiation that hardened into a status quo — one that can return to the table whenever SoftBank’s cash position loosens.
Three checkpoints
For anyone tracking this, three indicators matter.
- Whether the LINE Plus separation completed — March 2026 was the target. It is the last line connecting the Korean engineering organization.
- SoftBank’s cash position — as the OpenAI commitments clear, acquisition talks can resume.
- The durability of Naver’s dividend — with no operational influence, a shrinking dividend weakens the case for holding the stake at all.
The question that remains
LINE is a case of a Korean company building Japan’s national messenger. That success became the vulnerability. Where legitimate supervision ends and industrial policy begins, when foreign capital operates infrastructure-grade services — a precedent for that question was set here.
And the precedent was not seizure of shares. It was leaving the shares in place and replacing the wiring.