Naver said Monday that the internet company agreed to enter into a joint venture with Softbank to operate both the internet portal Yahoo Japan and chat app Line. The partnership aims to create a stronger entity able to compete against big IT companies from the U.S. and China.
To form the new 50-50 joint venture, the two IT companies already signed a basic agreement.
The partnership will turn into the largest shareholder of Z Holdings under the agreement. Z Holdings is a parent company of Yahoo Japan and a Softbank subsidiary. Yahoo Japan and Line will become subsidiaries under the new venture.
Naver owns 73 percent of Line while Softbank owns 45 percent of Z Holdings. Line, the most used messaging app in Japan, has over 80 million users. The agreement is set to be finalized by October 2020.
The venture aims to compete against U.S. internet giants such as Google, Apple, Facebook, and Amazon, and Chinese IT titans such as Baidu, Alibaba, Tencent, and Huawei.
The deal will become the largest internet platform in Japan once the joint venture is settled. With over 100 million users, the platform will span search, messenger, digital payments, and e-commerce.
Naver, heavily investing in the artificial intelligence (AI) sector, expects the deal could produce a symbiosis in the said sector.
The company said, “The deal is expected to create synergy and increase future growth, making Z Holdings a new tech firm based on (AI) that can compete against global platform operators.”
CEO of Naver Labs, Suk Sang-ok, recently stated the company plans to aggressively invest in AI technology and generate a research belt that could contend against U.S. and China. Naver Labs is the research and development division of Naver.
Industry officials believe the partnership will bolster further the economic ties between Korea and Japan. The officials welcomed the move despite the months-long trade feud stemming from a historical dispute coming from actions committed by Tokyo against Seoul during its occupation of the Korean Peninsula.
Lee Jae-woong wrote on Facebook, “The merger between Line and Yahoo Japan is the most significant piece of economic cooperation between Korea and Japan in the last decade.”
Lee Jae-woong is the founder of Naver’s local rival Daum and CEO of the car-sharing company SoCar. He said, “The Line-Yahoo Japan company will have a market cap of more than 30 trillion won to become not only the largest internet company in Japan but also a partner to expand their business into Southeast Asia.”
He added that the 50-50 joint venture from the Naver and Softbank in Korea and Japan “hadn’t occurred when the two countries had good relations,” also stating that he believes there will be similar cases in the future.
