TOKYO (Reuters) – Japanese messaging app Line, owned by SoftBank Corp’s Z Holdings Corp, allowed Chinese engineers at a Shanghai affiliate to access data on Japanese users without seeking their consent, Japanese media reported on Wednesday.
Under Japanese privacy regulations, companies have to inform users when their personal data is sent overseas, public broadcaster NHK said.
“There hasn’t been anything that breached legal or regulatory boundaries,” a spokesman for Line said.” We will continue to respond to laws and regulations in all jurisdictions, including Japan.”
Government officials responsible for overseeing privacy protection were not immediately available for comment.
Four engineers at a company in China, who perform system maintenance for Line, were allowed to access servers in Japan from 2018 that contained the names, telephone numbers and e-mail addresses of users, local media said.
The reports come as Japan tightens laws and regulation around the use and storage of personal data held by internet companies.
Line, which has 186 million users worldwide – of which just under half are in Japan – has since blocked access to user data at the Chinese affiliate, the company spokesman said.
Line this month became part of Z Holdings, formerly Yahoo Japan, creating a $30 billion domestic internet heavyweight to compete against local and U.S. rivals.
Messages sent via Line can only be read by the sender and receiver as app, like other messaging apps, encrypts message content end to end.
Z Holdings is controlled by SoftBank Corp through holding company A Holdings, which is jointly owned by SoftBank Corp and South Korea’s Naver Corp, the former operator of Line.
Z Holdings, which plans to invest 500 billion yen ($4.58 billion) in technology over the next five years, announced the Line tie-up last year but was forced to delay the move from October because of the COVID-19 pandemic.
Line has expanded its business into cashless payment and more recently telemedicine.
Shares of Z Holdings, which also controls fashion retailer Zozo Inc and office supplies firm Askul Corp, dipped 2% in morning trade to 605.5 yen, compared with the Tokyo exchange’s TOPIX index which was flat.
($1 = 109.1500 yen)
(Reporting by Tim Kelly, Takashi Umekawa and Chang-Ran Kim; Editing by Himani Sarkar and Christopher Cushing)
