LY Corporation - Company History

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.

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.

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.