In a significant development, SoftBank Corp-owned Japanese messaging app Line allowed Chinese engineers at a Shanghai affiliate to access data on Japanese users without gaining their consent, reported Japanese media on Wednesday.
“There hasn’t been anything that breached legal or regulatory boundaries,” said Line’s spokesman. “We always put ourselves to a standard were we want to be as transparent as possible.”
The reports come in the wake of Line becoming part of Z Holdings, which is owned by SoftBank and which was formerly known as Yahoo Japan, in an effort to create a $30 billion domestic internet heavyweight to compete against local and foreign rivals.
According to a report from Japan’s Asahi newspaper, four Chinese engineers working at a company in China were allowed to access servers that contained the names, e-mails of users as well as their phone numbers, said the paper.
It is unlikely that the engineers were able to read the messages since Line, like many 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.
With the news reaching the market, shares of Z Holdings went down by 2% in morning trade to 605.5 yen, compared with the Tokyo exchange’s TOPIX index which was flat.