Line's AI Bets Pit Japanese Messenger Against Amazon, Google

(Bloomberg) -- Line Corp. outlined an ambitious artificial-intelligence strategy that promises to transform Japan's most popular messaging service while pitting it against Google, Facebook Inc. and Amazon.com Inc.

The company is launching a suite of AI software tools to power an online digital assistant capable of conversing in Japanese and Korean, Line said at the Mobile World Congress in Barcelona on Wednesday. Users can talk to the assistant, getting the latest weather and news through either a dedicated smartphone app or a tabletop-speaker called Wave that's similar to Amazon's Echo. Both will be available in early summer.

Silicon Valley companies are exploring ways of extending their reach beyond smartphones, with Amazon and Google both selling AI-powered digital assistants not unlike Wave. Facebook, whose Messenger and WhatsApp compete with Line, has launched a chatbot platform and plowed more than $2 billion into virtual reality. But Line believes it can leverage local knowledge to beat tech giants in its home country and markets where its messaging service is popular, including South Korea, Taiwan, Thailand and Indonesia.

“There is a shift toward toward post-smartphone, post-touch technologies,” Chief Executive Officer Takeshi Idezawa said in an interview. “These connected devices will permeate even deeper into our daily lives and therefore must even closer match the local needs, languages and cultures.”

Line developed its AI platform with parent Naver Corp. The South Korean company operates that country's dominant search engine, displacing Google in a testament to the power of local knowledge, Idezawa said.

Tokyo-based Line is already much more than a messaging service on its home turf, with people using the app to read news, hail taxis and find part-time jobs. That wealth of content and interaction in local languages gives Line an advantage over larger rivals because AI is only as good as the data on which it's trained, Idezawa said.

Line is also open to acquisitions and partnerships in the field. The company is buying a stake in Vinclu, a Tokyo-based Internet of Things startup. It invested in Sound Hound, a U.S.-based voice recognition company, together with Naver last month. And it's considering joining forces with Sony Corp. to develop smart devices.

Line's shares rose as much as 2.1 percent in Tokyo on Thursday. The stock is still down about 2 percent this year, amid concerns about stagnating growth at a company that pulled off 2016's biggest technology public offering. Idezawa is under pressure to find new sources of revenue on what is otherwise a free messaging service, as subscriber addition and revenue from games and digital stickers slow.

For now, Line has pinned its hopes on advertising and as-yet unannounced products, while AI remains a more distant prospect.

“It's one of the longer-term bets,” Idezawa said. “The point is to secure a position early on. People will probably begin to use these services more regularly three to five years from now.”

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan