Prospects for a new ‘super app’ . . .
Japan’s SoftBank Group and South Korea’s Naver are in negotiations over the merger of Yahoo Japan and the Line messaging app. SoftBank Group owns 45 per cent of Yahoo Japan’s parent company, Z Holdings, while Naver owns 73 per cent of Line. The merger would represent a major change in Japan’s digital market, with the creation of a ‘super app,’ combining e-commerce, internet search, messaging, and mobile payments. The new venture would also bring together Yahoo Japan’s 29 million e-commerce users and Line’s 82 million monthly users. The future super app, with over 100 million users in Japan alone, would be a fierce competitor to Japan’s e-commerce giant, Rakuten. News of the merger sat well with investors, increasing parent company shares in Yahoo Japan and Naver by 16 per cent and nine per cent, respectively.
SoftBank’s search for the next Alibaba . . .
The merger is part of SoftBank’s efforts to compete with similar one-stop platforms like Tencent Holding Limited’s WeChat, while also replicating the success it had when investing $US20 million in Alibaba in the early 2000s. The investment is SoftBank’s most successful yet, reaping a $US60 billion profit when Alibaba went public. Through its Vision Fund, SoftBank has injected cash into Asian tech-startups – including China’s ride-hailing app Didi Chuxing, India's hotel-chain Oyo, Indonesia's e-commerce site Tokopedia, and Singapore’s Grab – which have been largely loss-making and have long timelines for profitability. However, after billion-dollar losses on WeWork and Uber, SoftBank has tightened its purse strings, and is demanding profitability from the companies in which it invests.
The ‘SoftBank effect’ . . .
Softbank’s frantic deal-making over the last two years has injected billions of dollars into start-ups that rely on a vast number of contractors to develop products and services, allowing start-ups to attract contractors with inflated financial incentives. With a short-term focus on profitability, however, many contractors in developing countries found their payments slashed, severely reducing their incomes. Canadian cities like Vancouver should keep an eye on contractor incentives, as ride-hailing app Lyft begins driver recruitment, to guard against similar promises that may put contractors at risk.
- Nikkei Asian Review: Yahoo Japan to merge with Naver’s Line app
- Nikkei Asian Review: Asia braces for ‘tech winter’ after Softbank losses
- The New York Times: The SoftBank effect: How $100 billion left workers in a hole