Naver and SoftBank Join Hands to Target the Simple Payment Market in Japan and the AI Industry

Nov 19, 2019

Naver and SoftBank have basically become brothers through combination of LINE and Z Holdings (Yahoo Japan’s mother company). As a result, changes are expected to the landscape of internet industries in Asia as well as Europe.
LINE is a messenger application that holds about 70% of market shares in Japan and it has more than 80 million MAUs (Monthly Active User). Not only is it the most used messenger application in Japan, it is also used the most in Thailand and Taiwan as well.
Yahoo Japan is Japan’s biggest internet company and it has more than 50 million MAUs. When Yahoo Japan and LINE are combined into one, they become a huge internet platform that has more than 130 million MAUs.
Management integration between LINE and Z Holdings is expected to bring immediate effects from financial fields. First, cutthroat competition can be reduced. LINE is currently pushing to establish LINE Bank in 2020. Z Holdings’ internet-only bank called Japan Net Bank has been accumulating helpful experiences since 2020.
Wall Street predicts that LINE and Z Holdings will dominate Japan’s simple payment market by utilizing costs efficiently. Japanese Government is looking to increase the percentage of non-cash payments to 40% by 2025. LINE and SoftBank have both drastically increased their marketing costs in order to grab the upper hand of the simple payment market in Japan. LINE recorded $128 million (13.9 billion Yen) of loss in the second quarter due to promotions.
“It is expected that LINE and Z Holdings will be able to create synergy within the simple payment market in Japan where competitions are becoming more intensified through cost reduction and combination of customers.” said Lee Dong-ryoon who is a researcher from KB Securities through a recent report. “LINE and Naver will be able to make a fast turnaround to their performance next year and dominate the simple payment market in Japan in the mid to long term and strengthen their services through e-commerce, FinTech, and advertisement.”

Naver and SoftBank Join Hands to Target the Simple Payment Market in Japan and the AI Industry

In the mid to long-term, they are expected to achieve results within the field of AI (Artificial Intelligence). Naver announced its plan on AI belt that covers Asia and Europe during a developers event called ‘DEVIEW’ that was held last month. Its main bases will be South Korea, Japan, Vietnam, and France. Through its AI belt, it is looking to compete with giant internet companies such as Google. It also selected South Korea, Japan, Vietnam, and France as its main bases as they are much affected by multinational internet companies.
“Our plan is to draw a blueprint that can emerge as a new global trend and compete with the U.S. that is centered on GAFA (Google, Amazon, Facebook, Apple) and China that is centered on BATH (Baidu, Alibaba, Tencent, Huawei).” said President Seok Sang-ok of Naver LABS. Naver is looking to draw up a new axis within the AI ecosystem through South Korea and Japan.
Chairman Masayoshi Son of SoftBank also sees AI as one of key technologies for the future. When he visited President Moon Jae-in in July, he heavily emphasized the importance of AI.
In the evening of the day when Chairman Son met with President Moon, Chairman Son also met with Founder and GIO Lee Hae-jin of Naver and others somewhere in Seongbuk-gu for more than 2 hours. Some say that the meeting was the decisive point towards the collaboration between Naver and SoftBank.
Staff Reporter Kim, Siso | siso@etnews.com

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