- Thierry Spanjaard
Softbank merges Yahoo! Japan and Line to create a new internet giant
Softbank, which owns Yahoo! Japan, is merging this activity with the Japanese messaging app Line in a 50/50 deal. The new entity, called Z Holdings, will have more than 100 million users in Japan across financial services, eCommerce and more. Line instant messenger claims to have over 82 million monthly users in Japan, which puts it way ahead of any of its competitors or even Instagram or Facebook. The merger is expected to be completed in October 2020 and the newly created entity will have a market value of JPY 3.3 trillion (EUR 27.5 billion).
Line messaging is in a dominant position in Japan, Taiwan and Thailand. Besides instant messaging, Line provides payment services called Line Pay, that are available not only in Japan, but also in Thailand, Taiwan and Indonesia.
The merger offers SoftBank access to 164 million Line users and their data across Japan and Southeast Asia. The goal of the move is to create a new company capable of competing with US and China tech powerhouses. According to analysts, the combined company could end up as a formidable competitor in Japan to Google and Amazon.
Instant messaging is a formidable vector for the development of services as has already been demonstrated by other players. For instance, WeChat, in China, positions itself as an all-in-one app and proposes an extremely wide array of services including messaging, voice messaging and video calls, photo sharing, real time location with friends, online articles, WeChat Pay to merchants, P2P money transfers, access to third party services such as food delivery, tickets booking or ride hailing, access to public services, official electronic ID, and more.
Globally, instant messaging is a support for the development of payment applications both for P2P payments and for payment to merchants. This has been demonstrated by the emergence of WeChat Pay, Facebook Pay, WhatsApp Pay, Line Pay, …
More generally, what is at stake with instant messaging is access to end users. This is the core reason why Facebook acquired WhatsApp in February 2014 for approximately US$ 19.3 billion (EUR 17.4 billion). Now, Facebook has announced the merger of Facebook, WhatsApp and Instagram in 2020.
In related news, Softbank has had to stand abysmal losses from WeWork a few weeks ago. Softbank reinjected a rescue line of US$ 9.5 billion (EUR 8.6 billion) resulting in the Japanese technology conglomerate now owning around 80% of the shared office spaces company. This has led to a massive restructuring at WeWork consisting in terminating Adam Neumann’s CEO position, who will get around US$ 1.7 billion (EUR 1.5 billion) as a payout, and laying off 2,400 employees, around 20% of its workforce; WeWork will also be outsourcing 1,000 people who work on its janitorial team. Once valued at as much as US$ 65 billion (EUR 58.7 billion), WeWork is now thought to be worth US$ 8 billion (EUR 7.2 billion), less than the US$ 9.5 billion (EUR 8.6 billion) SoftBank had invested in the company before the rescue package. As a result, WeWork has turned into a long term investment for Softbank with little real prospect of return.