What is the biggest external risk facing the company? Is it a macroeconomic downturn, stricter regulations, or the emergence of disruptive technologies?

That's an excellent question because these three risks represent formidable challenges for LINE Yahoo (which we'll refer to as LY company), each with its own distinct dangers. Determining which is the "greatest" depends entirely on perspective—whether we're looking at immediate troubles or long-term survival.

In my view, the significance of these risks is dynamic, but currently:

The most concrete and pressing headache at the moment is "stricter regulation."
In the long run, the most fatal risk, the one most likely to push the company beyond salvation, is "the emergence of disruptive technologies."
"Macroeconomic recession," meanwhile, is like an unavoidable storm—harsh but ultimately a cyclical challenge.

Let's break down why I see it this way.

1. Stricter Regulation: A Fire Licking at the Eyebrows

For LY, this risk isn't just a "possibility"; it's actively unfolding, and it's extremely complex.

The Core Issue: Data Security & "Decoupling from Naver" You've likely heard about recent revelations of security vulnerabilities in LINE user data, particularly concerning the technology and server management heavily dependent on Naver, its South Korean parent company. This set off alarm bells. The Japanese government reacted with high alarm, asserting that data security for a national-level app cannot be entrusted to a foreign company.
The Consequences? Japan's Ministry of Internal Affairs and Communications has issued two consecutive "administrative guidance" orders, using severe language demanding LY undertake thorough security reforms and reduce its reliance on Naver both technologically and in terms of capital. This is far beyond mere fines; it strikes at the very core of LY's ownership structure and technological foundation. Imagine the difficulty and cost involved in essentially "quitting" a decade-long technology partner while untangling complex equity ties.
Why is it the most urgent? Because it's a political and structural problem. The company isn't solely in control; it must satisfy government demands. Mishandling it could lead not only to massive fines but also threaten the company's operating license and public trust. This direct governmental pressure is among the hardest external risks for any company to manage.

2. The Emergence of Disruptive Technologies: A Wave Powerful Enough to Flip the Table

If regulation is the immediate crisis, technological disruption is the long-term challenge determining whether LY remains a champion or fades into irrelevance.

Primary Threat: Generative AI LY's two main cash cows are advertising (primarily from Yahoo Search) and e-commerce. Both are fundamentally built on the user behavior of "actively searching for information and clicking links."

Generative AI, led by models like ChatGPT, introduces a new paradigm:
- Disrupting Search: Previously, to find "the best ramen in Tokyo," you'd search on Yahoo and sift through links and ads. Now, you ask an AI, and it synthesizes information to give you a direct answer and even book for you. In this process, there's no search query and no clicks. Where does that leave LY's advertising? The foundation of ad revenue is undermined.
- Transforming Social Interaction: LINE is currently Japan's dominant chat app. But who's to say a new AI-powered, smarter, and more engaging social tool won't emerge? Just as TikTok disrupted text/image-based social media with short videos, new technological waves can completely reshape how people communicate.
Why is it the most fatal? Because technological disruption is a game-changer. It doesn't just compete for market share; it renders your entire playing field obsolete. Nokia wasn't beaten by Motorola; it was surpassed by Apple's smartphone. For LY, failure to secure a core role in the new AI era could mean that everything it possesses today—traffic, users, data—becomes virtually worthless.

3. Macroeconomic Recession: An Unavoidable Common Cold for Everyone

An economic recession is undoubtedly a major risk, but it's more of a "universal" challenge.

The Impact Path is Direct:
- Businesses Cut Budgets: In tough economic times, companies first slash advertising and marketing expenses. LY's ad revenue takes a direct hit.
- Consumers Tighten Belts: When people have less money, spending on Yahoo Shopping or ZOZO drops, impacting e-commerce and financial services revenue (like PayPay transactions).
Why This Ranks Last? While the impact is significant, all companies are affected equally; it's a systemic risk across the entire market. Furthermore, economies are cyclical—recessions are always followed by recoveries. For a company of LY's scale, it has sufficient resources and diversified businesses to weather cyclical downturns without existential threats. In contrast, the "surgical strike" of regulation and the "industry revolution" posed by technology are far more perilous.

To Summarize

Think of it this way:

Regulation is like a police officer pulling you over while you're driving, declaring your engine (core tech architecture) critically flawed and demanding immediate, major repairs—or else your license is revoked. It's the most urgent trouble now.
Technological Disruption is like everyone switching to flying cars while you're still figuring out how to make your gasoline vehicle go faster. Your car itself might be fine, but your entire road is about to disappear. It's the most fundamental threat to survival.
Economic Recession is like being caught in heavy rain and traffic; all vehicles slow down or even stop. It's tough, but you know clear weather and open roads will eventually return. It's a cyclically difficult period.

Therefore, if pressed to name the "greatest" risk: "Stricter regulation" is the bomb LY needs to defuse immediately, while "disruptive technology" is the Sword of Damocles hanging over its head, determining its ultimate fate.