Naver may lose the app LINE (the #1 messaging app in Japan) that they built

The Japanese government is pressuring Korea's Naver Corporation to reduce its control over the popular LINE messaging app, which has caused a decline in Naver's stock price.

As of May 9, Naver's stock price is trading at 187,400 KRW (~136.65 USD), down 3,500 KRW (~2.55 USD)(1.83%) from the previous day. It dropped to 185,500 KRW (~135.28 USD) in early trading.

This drop appears to be linked to LINE Yahoo's statement that it will "gradually terminate its relationship with Naver and pursue independence in technical cooperation."

Previously, the Japanese government twice requested that LINE Yahoo reassess its capital relationship with Naver due to administrative guidance related to last year's leakage of LINE users' personal information.

Naver and SoftBank each hold 50% of A Holdings, the parent company of LINE Yahoo's largest shareholder, but it seems the Japanese government wants SoftBank to have a majority stake in LINE.

LINE Yahoo CEO Idezawa Takeshi announced on May 8 that the company plans to end its commission relationship with Naver.

LINE is Japan's most popular messaging app, developed in June 2011 by Korean companies Naver and Hangame under their subsidiary NHN Japan. The app has over 700 million users worldwide.

Some speculate that the departure of Shin Jung Ho, LINE Yahoo's Chief Product Officer, and nicknamed the "Father of LINE," from the board of directors, and the appointment of a Japanese executive in his place, was a strategic move to reduce Naver's influence over LINE.

In response to these developments, the South Korean government has vowed to protect its companies from Japanese regulators. According to ABC News, South Korea’s second vice technology minister, Kang Dohyun, stated to reporters in Seoul, "I would like to reiterate that the government is firmly committed to ensuring that our companies, including Naver, do not receive any disadvantages or unfair treatment in foreign businesses and investments... We will respond sternly and strongly to any discriminatory measures taken against our companies."