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Chat app Line runs into trouble in Thailand and Japan, two of its key markets

TechCrunch TechCrunch 7/04/2016 Jon Russell

Japan-based messaging app kicked off its move into chat bots today, beating Facebook to the punch in the process, but it has been a challenging week for the company, which rumored to be pursuing an IPO, in two of its most important markets.

Firstly, in its home country, Line is under investigation from authorities for the way that it handles virtual currencies with its games. Reuters reported that Japanese regulators “raided” the offices of Naver, Line’s parent company, to look into whether it flouted rules for handling customer money

Game tokens are hugely popular in Japan, which is the world’s most lucrative mobile gaming market, and regulations require companies to park half of its customers’ unused deposits with the Legal Affairs Bureau if they exceed $90,000 in total. Investigators are looking into Line game ‘Key to the Treasure Box,’ with Line telling Reuters it didn’t deposit the unspent credits because they are not currency — they are Line points.

Over in Thailand, meanwhile, Line is under investigation for allowing stickers that mock the country’s royal family to be available. Thailand’s lese majeste law forbids insults of the monarchy, and is punishable with up to 15 years in prison. Thailand’s junta government, which assumed control of the country via a military coup in 2014, has used the law in recent times to prosecute a man who defamed the king’s dog and people who have made comments on Facebook, among other cases.

The stickers were made available to Thai users via its community, which allows anyone to create and sell stickers to Line’s 215 million active users. Line typically vets the content before it goes on sale, so it’s unclear why that didn’t happen in this case given the legal ramifications of this particular sticker set.

The deputy chief of Thailand’s Technology Crime Suppression Division told Reuters the police is “investigating where the stickers came from and who did this.” Line issued an apology in the following statement received by TechCrunch.

Line Corporation is aware of the culturally sensitive sticker set that may have caused discomfort among our users in Thailand. The sticker set in question has been pulled from the Line Sticker Shop.

As we take our users concerns seriously and consider cultural aspects of each country, we will continue to improve our LINE Creators Market.

We regret any inconvenience this may have caused and appreciate your understanding.

Thailand is an important market for Line. The messaging app is thought to have more than 30 million users in the country, making it a similar size to Facebook. Thailand, together with Japan, Taiwan and Indonesia, represents one-third of the company’s active userbase.

Line has used to Thailand is test a number of new services in recent times, but it has also run into controversy in the country. Thai police previously requested access to user data, while politicians have previously claimed was granted. Line repeatedly denied providing such information. Last year it introduced an end-to-end encryption system for messages which, it claimed, made parts of its user data inaccessible to even Line itself. (Line’s encryption isn’t as robust as WhatsApp’s recently announced security measures which fully encrypt all user data.)

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