Will Naver succeed in 3rd attempt to enter Japan market?

Naver founder and global investment officer Lee Hae-jin will lead the holding company of Line and Yahoo Japan. / Courtesy of Naver

By Kim Bo-eun

Eyes are on Naver's latest move to enter Japan's search engine market, given this is its third attempt after two failures.

Korea's No. 1 portal is confident about its third entry, which raises the question of whether circumstances are any different this time.

"We believe we will certainly be able to succeed this time," Naver's head of Search CIC Kim Sang-beom said at DEVIEW 2020, a conference for developers held Nov. 25.

Naver in 2000 established Naver Japan, a subsidiary in charge of the portal business there. However, services were scrapped in January 2005, as Naver failed to eke out a market share given the dominance of Yahoo Japan and Google.

Naver tried again in 2007, setting up the subsidiary another time, but pulled out at the end of 2013.

In 2018, Naver stated it would take its search services to Japan for the third time. As part of preparations, the company merged its search technology R&D unit and its unit developing artificial intelligence (AI), launching "Search & Clova."

Naver's CEO stated in early 2018 that this integrated body focusing on search technology and AI would serve as a base to take Naver's search services overseas.

In addition to the tech boost, Naver's confidence this time is based on changed market circumstances. This is because Naver's greatest competitor Yahoo Japan merged with Line, Naver's subsidiary in Japan.

Naver cites the merger with Yahoo Japan as a chance to assimilate know-how in Japan's search sector.

The internet services company said its search technology has made strides, entering international conferences. It is also conducting joint research with Naver Labs Europe, the largest industrial research center for AI in France.

Naver said the number of engineers for Japan's search engine technology has grown by eight times from the time the previous market entry attempt was made.

Line is set to support Naver's new attempt, with its wide user base in Japan. Line launched as a mobile messaging app in 2011 and grew into Japan's top player following its recognition in the country as a reliable messenger service amid the earthquake there the same year.

Line has entered Taiwan, Thailand and Indonesia and expanded its services in the fintech sector, with an aim to become a multi-function platform. Line's monthly active users amount to 16.7 million.

The Line-Yahoo venture is seeking to grow into a tech company that will compete with global giants such as Google, Facebook and Tencent.

Naver's founder and global investment officer Lee Hae-jin will lead the holding company of Line and Yahoo Japan, A Holdings.

The joint venture seeks to expand business in a wide range of sectors including AI, commerce, fintech and advertising.

Google still dominates as a search engine in Japan, its market share accounting for 70 percent while Yahoo Japan has about 20 percent.