An extraordinary shareholders meeting of Z Holdings Corp., the operator of internet search engine Yahoo Japan, approved Tuesday its management integration with Line Corp., the operator of a free messaging app, scheduled for October.
"We initially aim to establish an overwhelming presence in Japan and eventually become a company that leads the world," ZHD President Kentaro Kawabe said at the meeting in Tokyo. The company plans to speed up efforts to secure a foothold in Japan, with an eye on countering IT giants in the United States and China.
ZHD plans to make Line a wholly owned subsidiary after the plan is reviewed by the Fair Trade Commission.
Yahoo and Line will come under the umbrella of the merged company, which will also operate Z Holdings' hotel and inn reservation site ikyu.com and online clothing shop Zozotown.
At the meeting, Kawabe stressed the need for management integration, saying, "We will be submerged unless we take countermeasures," expressing a sense of crisis as large IT companies in the United States and China step up their offensives. A desire to compete with the IT giants dubbed GAFA, including Google and Facebook, as well as Chinese tech majors Baidu and Alibaba, is behind the move.
However, even after the business integration, there will still be a big gap between the domestic and overseas rivals.
The combined market capitalization of ZHD and Line is about 2.8 trillion yen, far more than their domestic rival Rakuten, which has 1 trillion yen.
However, compared to Apple Inc.'s market capitalization of 112 trillion yen and Amazon.com Inc.'s 89 trillion yen, it is extremely small.
Research and development costs are currently about 20 billion yen for the Yahoo-Line alliance. Amazon spends more than 3 trillion yen on this area. After the integration, the company plans to increase its annual R&D expenditures to 100 billion yen, mainly in the field of artificial intelligence, but there still is a big gap.
Kawabe explained his vision for the future of the company, saying, "We would like to be an alternative to the United States and China, and a third option." As a realistic initial goal, he projected taking the lead in Japan and Asia.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
