LY Corporation: long-term performance & turning pointsSales (revenue) and profit-margin ratio
Sales (¥ bn)Net margin (%)
1996A borrowed-brand portal
Revenue (¥ bn, bars) · net margin (%, line)
Source: securities reports
FY1996 · unconsolidated
Revenue$0K
Net income-$46K
Net margin—
→
FY2003 · consolidated
Revenue$509M
Net income$104M
Net margin20.3%
1996Yahoo Japan founded — a SoftBank–Yahoo joint venture
1996Yahoo! JAPAN portal launches
1999Yahoo! Shopping and Yahoo! Auctions launch
2001Yahoo! BB broadband service begins
2003Listed on the Tokyo Stock Exchange First Section
In January 1996, at the dawn of Japan’s commercial internet, Masayoshi Son’s SoftBank and the American Yahoo set up Yahoo Japan as a joint venture — SoftBank 60%, Yahoo 40%. Masahiro Inoue, a SoftBank alumnus who joined as a director, became president that July. A licence secured the exclusive right to the “Yahoo!” name in Japan, though use of the brand was confined to the domestic market: the brand was rented from America while capital and day-to-day management stayed wholly in Japanese hands. That lopsided structure — borrow the name, keep control — set up the long game of later independence and the eventual buyout of the US Yahoo stake.
Yahoo! JAPAN launched in April 1996 with a human-curated directory, then folded in news and weather through alliances to become a portal. Page views reached five million a day in 1997 and 100 million in 2000. At a fraction of a yen per page view, the enormous traffic converted directly into advertising inventory — a model that was simple and highly profitable, bringing $97.4M (¥12bn) of ad revenue and $74.2M (¥9bn) of operating profit in the year to March 2002.
In September 1999 Yahoo launched Shopping and Auctions on the same day, and the two diverged sharply. Shopping, aimed squarely at Rakuten, could not turn portal traffic into an edge against Rakuten’s patient merchant support or Amazon’s investment in logistics, and stayed on the back foot through the 2000s. Auctions — a person-to-person market with strong network effects — waived fees to build a base thirty to seventy times its rivals’, then charged for it, earning $194.3M (¥21bn) of operating profit on its own by FY2005. Alongside, Yahoo lent its reach to SoftBank’s broadband gamble, Yahoo! BB (2001), taking the modem-sales margin. A first TSE listing followed in 2003.
2011LINE launches (NHN Japan) — the future partner
Under Inoue’s sixteen-year presidency, the very success of the PC portal hardened into inertia. The organisation’s yardsticks and its investment judgment were deeply optimised toward maximising PC page views, and the culture set hard around the desktop screen. The young mobile talent Yahoo had absorbed in 2000, when it bought the venture PIM (Dennoutai) for about $46.4M (¥5bn), sat largely unused inside the company; that cohort — among them Kentaro Kawabe — would not reach the centre of management until the changeover of 2012, twelve years on.
From the fiscal years 2008 to 2011 revenue growth stalled, and Yahoo was slow to answer the smartphone. In July 2010 it stopped its own search system and switched the engine to Google’s technology — ceding the portal’s core technology to a rival and, in effect, giving up its own technical self-reliance. It was a heavy marker of how far optimisation around an existing success had made investment in anything new hard to justify.
In April 2012, on Son’s nomination, the 44-year-old Manabu Miyasaka became CEO and almost the entire executive line-up was replaced with a younger, smartphone-first team. Kawabe — from the old PIM — became COO, and decision-making shifted from the PC to mobile. Miyasaka raised the banner of bakusoku (“breakneck”) management, simplifying approvals and winnowing the roughly 150 in-house services down to about 20 that could actually win, shutting or partnering out the rest. The rule was blunt — be number one, or partner, or quit — and it reversed a culture that had once multiplied services simply to harvest page views.
In October 2013 the “e-commerce revolution” made Yahoo! Shopping free to list on, swelling stores from about 20,000 to some 80,000 and swapping the source of revenue from listing fees to merchant advertising — the portal’s advertising model, carried onto e-commerce ground. On logistics, Yahoo deepened its tie with Askul and consolidated it in 2015; but a 2017 warehouse fire, continuing losses at LOHACO and a management rupture led, at the 2019 shareholders’ meeting, to Askul’s president being voted out — a governance flashpoint over parent–subsidiary listing, and a sign that capital alone could not command a business run on the ground.
2018PayPay launched; the US Yahoo sells its entire stake
2019Renamed Z Holdings; ZOZO taken over ($3.7B (¥401bn)); LINE merger agreed
2021Merger with LINE completed
2023Three-way merger forms LINE Yahoo (now LY Corporation)
2024Government guidances over the LINE data leak and NAVER ties
In July 2018 Yahoo entered QR-code payments with PayPay, a joint venture with SoftBank, buying users fast through cash-back campaigns worth some $90.6M (¥10bn) while losses mounted in a war of attrition with LINE Pay. That October the former US Yahoo sold all of its shares, leaving SoftBank the top holder and finally cancelling the borrowed-brand relationship — and the royalty that came with it. Then, in 2019, Yahoo took a 50.1% stake in the apparel mall ZOZO for about $3.7B (¥401bn), a deal set in motion less by synergy than by founder Yusaku Maezawa’s need to unwind pledged shares. Giving up on home-grown growth, Yahoo now bought scale ready-made.
In October 2019 the company renamed itself Z Holdings, shifted to a holding structure, and opened merger talks with LINE — a defensive move to end the PayPay/LINE Pay cash-back war and pool two very different user bases. The integration completed in March 2021, and in October 2023 Z Holdings, Yahoo and LINE merged three ways into LINE Yahoo (now LY Corporation). Across the whole arc — the borrowed brand, the buyout of the US stake, Askul, ZOZO and the LINE union — ran a single idea: not to raise each service oneself, but to re-bundle strong outside services with capital and fight as a whole.
The design’s cost then surfaced. A leak of about 520,000 records in November 2023 prompted Japan’s Ministry of Internal Affairs and Communications to issue two administrative guidances in 2024, pressing LINE Yahoo to review its development outsourcing to — and capital ties with — South Korea’s NAVER, LINE’s technical parent. The company cut its development commissions to NAVER to zero and separated the systems, but SoftBank’s talks to buy out NAVER’s half of the parent, A Holdings, have stalled. A firm that set out on a borrowed American brand had, through the LINE it bundled in, let Korean capital reach into its core — and was ordered by the state to pull the two apart.
The heart of this decision was directing the very same audience — some 100 million page views a day — into two businesses of quite different structure at once. Auctions was a person-to-person market, where sellers and bidders drew one another in and network effects worked strongly. By waiving listing fees to build a thick base of users first, Yahoo rode the loop in which that thickness attracts still more users, converting its reach directly into a market oligopoly. Here, the sheer size of the traffic translated straight into competitive advantage.
“Real business, or share price?” — a mirror of the parent’s strategy
The core of this decision lay less in Yahoo’s own business strategy than in how far Yahoo would lend its own profit and loss to the broadband gamble of its parent, SoftBank. By taking on customer acquisition and modem distribution and capturing the margin on the hardware, Yahoo could manufacture rising revenue even in the depths of an advertising slump. That a company built on the high-margin model of selling advertising without owning facilities would deliberately shoulder a low-margin business of selling things was a compromise struck to make the group’s cash flow and its own growth story hold together at the same time.
A generational handover that severed the memory of success
The centre of this decision was not financial repair but severing, with a single stroke of generational change, the organisational inertia bred by success as a PC portal. The pulling power of 100 million page views a day, and the high advertising income it earned, were — turned inside out — a culture set hard around the PC screen, a weight that had slowed the shift to smartphones. Inoue, who by his own admission loved what he had spent sixteen years building and said he did not even carry a mobile phone, embodied the depth of that inertia. That Son chose speed of change over continuity of management, and bet on the 44-year-old Miyasaka and a young executive team, came from the judgment that an extension of the existing optimisation could never keep pace with the smartphone era.
The essence of this decision was not to beat Rakuten and Amazon at running an e-commerce business, but to swap the whole mechanism of earning — from fees to advertising. Where Rakuten made its money on a SaaS-style mall that collected reliably from merchants through monthly listing fees and sales royalties, Yahoo tore down the barrier to opening a store, maximised the number of shops and products, and moved to a design that sold advertising within the thickened marketplace and recovered its money there. It was the choice of a company that had built high advertising profits as a portal to wield the same weapon between shoppers and merchants. To accept a short-term drop in revenue in order to maximise distribution scale was to swap the quality of its earnings from the certainty of fees to the possibility of advertising.
The logic of completing logistics, and the manners of control
The core of this decision lay where two questions overlapped: the strategic one of how an e-commerce business that owns no logistics is to secure logistics, and the governance one of how far a parent that has brought a listed subsidiary under its control may reach into its management. Since building a nationwide logistics network from scratch would take far too much time and capital, there was a logic to taking Askul — already a partner in LOHACO — into consolidation. If Yahoo, holding customer acquisition and payments, embraced Askul, holding logistics and merchandise procurement, the two together should have been able to stand against Amazon-style retailing as one.
A capital reshaping in which the seller’s circumstances chose the buyer
The core of this acquisition was that, more than any calculation of business synergy, it was a founder’s personal need to dispose of his shares that set the deal in motion. Maezawa’s holdings had been pledged in large volume to financial institutions as collateral, and a receptacle on the order of several hundred billion yen had to be secured in a short time. The route that ran through Masayoshi Son to Yahoo reflects a dynamic the reverse of the usual — the seller’s circumstances defining the cast of buyers. Yahoo did have its own logic, in expanding e-commerce gross merchandise value, but the first force that moved the deal was not strategy; it was the cleanup of capital.
Why an integration meant to stop competition took two reorganisations
The core of this decision was not an aggressive integration to open a new market, but a defensive reorganisation to stop the mutual exhaustion of two companies competing inside the group and to unwind, all at once, the structural weaknesses it carried. The cash-back war between PayPay and LINE Pay was battering the economics of payments; Yahoo’s growth could not continue without M&A; and the licence with the American Yahoo blocked the path overseas. To treat all of these at once with the single move of merging with a competitor — that was the answer chosen by Z Holdings, which changed its very name and reshaped itself into a holding company.
This is a condensed English edition. The full, source-by-source history — with the detailed narrative, financial tables, shareholders and executives — is maintained in Japanese: 日本語版（詳細）— LY Corporation full history in Japanese →
LY Corporation / Yahoo Japan / Z Holdings — 有価証券報告書 (annual securities reports).
ASCII — アスキー, 7 Jan 1999.
CNET Japan — CNET Japan: 2 Mar 2012; 7 Oct 2013.
Nikkei Business — 日経ビジネス (Nikkei BP): 16 Oct 2000; 18 Dec 2000.
Weekly Toyo Keizai — 週刊東洋経済 (Toyo Keizai): 12 Jun 1999.