DeNA faces a rough ride despite CEO apology

In the face of a growing scandal fueled by accusations that sites including Welq, a medical information platform owned by DeNA, had misappropriated web content from other sources, DeNA’s CEO, Isao Moriyasu, apologised at a news conference on 7 December “for causing trouble”.

Welq is understood to have published inaccurate articles and encouraged contributors to repurpose articles from other sources without attribution. According to Buzzfeed Japan, writers received a manual explaining how to rewrite existing content.

Many of Welq’s users are people looking for medical treatment. At its peak, the website attracted a monthly audience of more than 6 million, according to Nielsen research into smartphone users.

DeNa has suspended Welq and is understood to have shut down indefinitely nine other websites that followed a similar process. These span a range of sectors such as fashion and travel, and include Mery, iemo, Find Travel, Upin, cuta, CAFY, GOIN, JOOY and PUUL. Founded in 1999, DeNA owns the mobile gaming platform Mobage as well as a baseball team, the Yokohama DeNA Baystars.

DeNA is expected to launch an investigation by a third party into the practices behind its websites. In a statement issued prior to his apology, Moriyasu promised to take a 30 percent pay cut for six months in a gesture of atonement. He also said he would work to “fundamentally change our operations of these media and create a process which I can completely place my faith in”.

Commenting on the proceedings from a reputational perspective, Shingo Nomura, North Asia VP at The Hoffman Agency, said the findings are “a big problem” for DeNA because they suggest a lack of business ethics and corporate governance.

“DeNA has multiple businesses including a baseball team, so this issue is going to penetrate to other stakeholders,” Nomura said. “They need to investigate what happened and disclose it as soon as possible.”

Nomura said DeNA should have moved to deal with the crisis more swiftly, given that criticism of the websites began more than a month ago. “They should have responded earlier,” he said. In the statement, Moriyasu said: “It was my naiveté that did not allow us to respond in a timely manner to this situation, which allowed the problem to grow to such a significant scale.”

Curation sites as a whole are likely to experience fallout from the scandal in the short term, Nomura said. Other sites will now need to make an effort “to prove they are trustworthy”. But he pointed out that this does not apply to platforms such as SmartNews or NewsPicks, which curate content but direct users to the original source.