“What’s so exasperating for the Ministry of Internal Affairs and Communications and the Ministry of Economy, Trade and Industry … is the current situation in that platforms, terminals and apps have become dominated by foreign entities,” remarked an unnamed writer for a trade publication. “The ministries aren’t happy about this at all. What can be done to reinvigorate Japanese companies?”
The above excerpt from Weekly Playboy (July 28) was about several new deregulatory moves that would be disadvantageous to Apple’s iPhone, currently the dominant player in Japan’s smartphone market. But most of the other entities the speaker referred to — Android OS, Facebook and Twitter — were also based in the U.S.
What was not included above, but is being covered heavily in other media, was Line, a hugely successful mobile-messaging application that can be downloaded for free. While incorporated in Japan, Line is a fully owned subsidiary of South Korean IT giant Naver Corporation.
As this column noted six months ago, Line has become a major exception to the general rule that South Korean brands seldom succeed in penetrating Japanese markets. Initially launched in June 2011, three months after the Great East Japan Earthquake, Line caught on quickly because it enables cellphone users to bypass their networks and communicate via the Internet. In addition to games, Line’s services have expanded and presently its users can also communicate with each other for free, and — like Skype — Line offers a telephone app that considerably undercuts the rates charged by domestic phone networks.
Worldwide, Line now provides its apps in 18 languages and boasts 11 countries with 10 million or more users, with further growth expected. Japan’s user base is estimated at more than 52 million and in this year’s second quarter, the company reported ¥21.2 billion in revenues — a 2.5-fold year-on-year increase — mostly through sales of games and advertising.
Earlier this year, some analysts were predicting that Line would soon be forging a strategic alliance, perhaps a merger with one of Japan’s IT majors such as SoftBank. So doing, the common wisdom suggested, would serve to dilute the company’s Korean roots, thereby taking some of the sting out of its success. But instead, the company made the decision to go public, and sometime this autumn Nomura Holdings Inc. will reportedly be underwriting Line’s initial public offering. Projections are that Line’s IPO will bring in more than ¥1 trillion (approximately $10 billion).
The huge infusion of capital will give Line the funds to expand from an up-and-coming supplier of apps and games to a major player in the IT sector. By harnessing the momentum from its huge user base, it may acquire promising venture companies and even branch out in other business sectors such as electronic hardware, retailing or services.
Using money from Japanese consumers, and now investors, to contribute to the creation of an IT giant, particularly one with close ties to a bitter Asian rival, has been stirring nationalistic sentiments. The more paranoid of these see Line as some sort of insidious fifth column, with the potential to spy on everyone in its user network — a sort of corporate version of Hackers Anonymous. Posts attacking Line — often mentioned together with its South Korean roots — have become ubiquitous on blogs and bulletin boards. A search (in Japanese) using the terms “Line,” “South Korea” and “trouble” obtained 3.2 million hits.
The print media has also indulged in negative coverage. Between May 13 and 15, the evening tabloid Yukan Fuji, which since 2012 has become increasingly strident concerning all things Korean, ran a series of seven articles attacking Line under the title “Spring casebook of Line idiots.” The headlines included: “Female Line ‘addicts’ who receive more than 50 messages a day” and “During a group chat session by co-workers, the boss went on a rampage.” The latter phenomenon has inspired a new term: sō-hara jōshi — a supervisor who engages in harassment of subordinates via social media.
SNS accounts may also be vulnerable to identity theft, leading to fraud and other types of cybercrime. Citing data from the Tokyo Metropolitan Police, Shukan Asahi (Sept. 5) said 100 cases worth ¥6.5 million had been reported in the capital in the six weeks from the beginning of June to July 18. The words “Line sagi” (fraud) appeared prominently in the headline.
Even when Line receives generally favorable media coverage, accounts of malicious mischief by irresponsible users are sometimes slipped in. In a 32-page cover story about Line, business magazine Shukan Diamond (April 19) included a two-page advisory to parents on “Five ways to protect your children from ‘Line trouble.'”
Unfortunately, such concerns appear valid. Nikkan Gendai (Aug. 23) said the latest National Police Agency data showed an increase in sex crimes involving minors, particularly middle school students. The article quoted journalist Atsushi Tashiro, who singled out Line by name and said that encounters via social media were a contributing factor in such crimes.
Last month, the conservative party Osaka Ishin no Kai (One Osaka) announced its decision to expel Kei Yamamoto, a member of the Osaka Prefectural Assembly. The 34-year-old legislator was accused of sending threatening messages to junior high school girls last year via Line’s texting application, earning him the nickname “Line kengi” (Line prefectural assemblyman) in the tabloids.
Still, the magazines’ positions vis-a-vis Line also show occasional signs of flexibility. Spa! (Sept. 9), in a complete reversal of its vehemently negative coverage last spring, advised that procuring shares in Line — which are likely to be in such strong demand that applicants for the IPO will be selected by lottery drawing — will “double one’s assets.”
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