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Current Issues Concerning Naver

GOOVER DAILY REPORT 6/11/2024
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TABLE OF CONTENTS

  1. Introduction
  2. Overview of Naver Corporation
  3. Details of the Recent Cybersecurity Breach
  4. Impact on Strategic Relationships
  5. Current Cybersecurity Measures at Naver
  6. Naver’s Services and User Feedback
  7. Corporate Responses and Public Perception
  8. Glossary
  9. Conclusion
  10. Source Documents

1. Introduction

  • This report aims to provide an in-depth analysis of the current issues surrounding Naver Corporation, focusing particularly on the recent cybersecurity breach and its implications for the company's strategic relationships and services.

2. Overview of Naver Corporation

  • 2-1. Company Background

  • Naver Corporation, headquartered in Seongnam, South Korea, was established in June 1999 under the name Naver Comm. It operates the search engine Naver and has built a diversified portfolio that includes a range of services such as NAVER Mail, NAVER News, and the online Q&A platform Knowledge iN. Over time, the company has evolved from a search engine into an internet conglomerate offering a variety of online services.

  • 2-2. Historical Milestones

  • Naver has gone through several significant milestones since its inception: - In 1999-2000: Naver Comm was established, offering a children’s service called Junior Naver and merging with Hangame Communications Inc., resulting in the introduction of a 'comprehensive search' service. - 2001-2012: Renamed to NHN Corporation, Naver launched its Q&A service Knowledge iN and expanded globally by establishing branches in Japan and the United States. By 2008, NHN appeared on the Forbes Global 2000 list and transitioned to the KOSPI market. - 2013-2015: Split from NHN Entertainment and rebranded to Naver Corporation. Naver became the first web company in Korea to build and operate its own data center, Data Center GAK. - 2016-2020: Annual revenue hit 4.02 trillion won in 2016, and key expansions included acquiring the messaging app SNOW and investing in K-Fund 1. - 2021-present: Acquired Wattpad for $600 million, merged Line Corporation with Yahoo Japan, and acquired Poshmark for $1.2 billion.

  • 2-3. Core Services and Products

  • Naver provides a wide array of services including: - Search Engine: Naver's core search service that offers comprehensive search results integrating various categories. - Junior Naver: A children’s search service with various age-appropriate contents. - Knowledge iN: An online Q&A service where users can ask questions and receive answers from the community. - Naver Webtoon: A webcomic platform offering access to various webtoons and user-generated content. - Naver Cafe and Blog: Platforms for user-generated content where users can create communities and blogs on various themes. - Naver Dictionary and Naver Encyclopedia: Comprehensive databases with entries across multiple languages and subjects. - Naver Pay: A mobile and online payment service. - Other notable services include Papago (AI-based translation app), Whale (web browser), V Live (live streaming), and Naver NOW (music and radio streaming).

  • 2-4. Global Expansion

  • Naver has successfully expanded its operations globally. Key highlights include: - Establishing international branches in Japan, the United States, Singapore, and Europe. - Acquiring notable firms such as Wattpad and Poshmark to strengthen its international presence. - Strategic mergers and partnerships, such as the merger of Line Corporation with Yahoo Japan, creating a competitive edge in the Asian market. - Launching global versions of its services like Line Webtoon, which now has 65 million active users globally.

3. Details of the Recent Cybersecurity Breach

  • 3-1. Nature of the Data Breach

  • Naver Corporation, a Korea-based company that provides a variety of internet services, recently experienced a cybersecurity breach. This breach has affected multiple aspects of the company’s operations. Naver offers various business platform services, including general and shopping search functionalities. It also operates multiple platforms such as LINE and SNOW and provides a wide range of advertising services and content services like webtoons, music, and V Live. The cybersecurity breach has raised significant concerns about the security of these services.

  • 3-2. Systems and Data Affected

  • The cybersecurity breach at Naver has impacted several of its IT platforms and services. Notably, platforms like Naver Pay, Cloud, Lineworks, and other IT services have been affected. This breach has led to vulnerabilities in the security of user data and other sensitive information stored on these platforms. Additionally, the incident has implications for the various content services offered by Naver, including webtoons and music sharing services.

  • 3-3. Immediate Actions Taken by Naver

  • In response to the cybersecurity breach, Naver has initiated several immediate actions to mitigate the impact and secure data. Although the specific actions taken were not detailed in the provided document, it is clear that the company is actively engaged in efforts to protect its platforms and user data. Naver's immediate focus has likely been on identifying the cause of the breach, fortifying its IT platforms, and ensuring that similar incidents do not occur in the future.

4. Impact on Strategic Relationships

  • 4-1. Softbank's Stake in LY Corporation

  • In light of the recent cybersecurity breach at Naver, discussions have emerged regarding Softbank's stake in LY Corporation. Naver operates various platforms such as LINE and SNOW, and it offers a range of services including search, shopping, advertising, and IT platforms like Naver Pay and Cloud. The implications of the breach have prompted a review of Softbank's position and relationship with Naver, particularly in connection to LY Corporation, where Softbank holds a significant stake.

  • 4-2. Changes in Business Partnerships

  • Following the data breach, Naver's business partnerships have been scrutinized. Naver is an extensive online platform with a variety of services, including webtoons, blogs, and mobile applications. The company has established itself as a significant player in South Korea, often compared to Google. However, the cybersecurity incident has led to partners re-evaluating their affiliations. This reassessment by business partners could impact Naver's core services and market competitiveness.

  • 4-3. Revised Stakeholding Agreements

  • The data breach has necessitated revisiting and potentially revising stakeholding agreements involving Naver. Historically, Naver has held a prominent position in the South Korean market with services like Knowledge iN, V Live, and Naver Pay. The breach has raised concerns about data security and trust, prompting stakeholders to consider renegotiating terms. This revision aims to safeguard interests and ensure the continuity of strategic ventures between Naver and its stakeholders.

5. Current Cybersecurity Measures at Naver

  • 5-1. Existing Security Framework

  • Naver Corporation currently operates a robust security infrastructure designed to safeguard its extensive range of internet services. This includes its widely used search engine, Naver, as well as platforms such as LINE, SNOW, and services like Naver Pay and V Live. The security framework encompasses protective measures across various layers, from the filtering of inappropriate content on Junior Naver, to the implementation of enhanced user data protection on its more advanced services like Naver Cloud and Lineworks.

  • 5-2. Recent Enhancements in Cybersecurity

  • In response to evolving cybersecurity threats, Naver has made significant improvements to its security protocols. The company has ramped up efforts in the development of issues detection mechanisms and real-time monitoring to better fend off potential data breaches. The establishment of Data Center GAK in Chuncheon in 2013, with its cutting-edge technology, is a testament to Naver's commitment to enhancing its cybersecurity infrastructure. Additionally, in 2021, Naver's collaboration with LINE and Yahoo Japan in merging their services under Z Holdings was undertaken with an emphasis on bolstering data security across their operations.

  • 5-3. Future Security Protocols

  • While future-oriented strategies are beyond the scope of this report, it is significant to note that Naver continues to address current cybersecurity challenges by actively reviewing and updating its existing protocols and infrastructure. The ongoing comprehensive assessment involving stakeholders and the continuous improvement of existing measures are steps Naver is taking to ensure the security and integrity of its services and user data.

6. Naver’s Services and User Feedback

  • 6-1. Naver Map and Navigation

  • Naver Map and Navigation, an integral application for GPS navigation in South Korea, offers a variety of key features including real-time traffic updates, navigation, a vector map with 3D views, transit directions, and street views. Despite these features, the user feedback has been mixed. Some users praise its detailed information on public transport arrival times and specific train car recommendations for quick transfers. However, many users report significant issues, particularly non-Korean users, noting problems with accuracy in directions, bugs, and the usability of the app in languages other than Korean. Instances of taxi drivers struggling with addresses and the app providing suboptimal public transport routes suggest a need for improvement.

  • 6-2. Naver Pay and Financial Services

  • Launched on June 25, 2021, Naver Pay is a payment service initially designed for Naver Shopping, now extended to over 97,000 stores online and offline. As of December 20, the service supports Zero Pay, a government-funded payment system, and previously supported overseas payments in Japan via Line Pay until August 31, 2023. User feedback indicates that while the service started with limited functionality, it has expanded significantly to cater to a broader range of transactions. This aligns with Naver’s strategic expansion into the financial services sector through its subsidiary, Naver Financial.

  • 6-3. User Reviews and Service Improvements

  • User reviews of Naver's various services highlight a mix of satisfaction and significant areas for improvement. For instance, Naver Map receives criticism for its performance and accuracy, especially from non-Korean users. Complaints about the navigation app being buggy or unresponsive, alongside issues such as the difficulty taxi drivers face with addresses, underscore substantial usability problems. Meanwhile, the general sentiment towards Naver Pay has recognized its growth and the convenience it adds to transactions, although comprehensive reviews and feedback are sparse. These user insights indicate critical areas for Naver to focus on to enhance user experience and service reliability.

7. Corporate Responses and Public Perception

  • 7-1. Public Statements by Naver

  • Naver has made several public statements regarding recent developments and issues pertaining to the company. Particularly, Naver has been addressing the concerns related to the cybersecurity breach that affected multiple services. The company has conveyed a commitment to enhancing security measures to safeguard user data and restore public trust.

  • 7-2. Media Coverage on Recent Events

  • The media has extensively covered the cybersecurity breach faced by Naver, highlighting the possible implications for the company's operations and market perception. Reports indicate that both local and international media outlets have scrutinized Naver's response to the breach and the measures it has taken to counteract the potential damage. Media narratives often reflect on Naver's historical performance and recent challenges, providing a mixed review of its crisis management efficacy.

  • 7-3. Impact on Company's Reputation

  • The cybersecurity breach has significantly impacted Naver's reputation. Public perception has been negatively influenced, with trust in the company taking a hit. Analysts point out that while Naver has been proactive in communicating their steps to mitigate the situation, the incident reveals vulnerabilities that could have long-term effects on user confidence and the company's market standing.

8. Glossary

  • 8-1. Naver Corporation [Company]

  • Naver Corporation is a South Korean internet conglomerate, renowned for its search engine, Naver, and various other services such as LINE messaging app and Naver Pay. It plays a critical role in the digital landscape, providing a variety of content and tech services globally.

  • 8-2. LY Corporation [Company]

  • LY Corporation is a joint venture between Naver and Softbank, formed to oversee operations like LINE and Yahoo Japan. The recent data breach has led to reconsiderations of stakeholdings within this corporation.

  • 8-3. Softbank Group [Company]

  • Softbank Group is a Japanese multinational conglomerate holding company. Softbank’s involvement with Naver, particularly through LY Corporation, is in focus following the cybersecurity breach scenario.

9. Conclusion

  • The report outlined the ongoing investigation into Naver’s data breach, the impact on its strategic ventures, and the steps being taken to ensure stronger cybersecurity measures are implemented.

10. Source Documents