The deal puts Yahoo Japan, partly owned by the U.S. company, on a sharply different path from that of its American cousin, Yahoo, which is planning to use Microsoft’s Bing search technology by the end of this year under an agreement announced in 2009.
The partnership between Yahoo Japan and Google would create a
powerhouse that combines Google’s search technology with Yahoo Japan’s popular content and services. Financial terms of the deal were not disclosed.
Yahoo holds 34.8 percent of Yahoo Japan, while Softbank, the Japanese cellphone and Web giant, owns 38.6 percent.
Google’s share of Web searches in Japan has been growing, but it still trails Yahoo Japan, the market leader. According to Net Ratings, a research firm, Yahoo Japan grabs 53.2 percent of Web queries in the country, followed by Google at 37.3 percent. Microsoft’s MSN and Bing searches garnered just 2.6 percent.
Globally, though, Google dominates — the company had 85 percent of Internet queries, compared with 6.2 percent for Yahoo brand searches in June, according to the analysis arm of Net Applications, a Web services company.
Yahoo Japan’s adoption of Google’s search technology would mean that about 90 percent of Web queries in Japan would be powered by the company. Yahoo Japan used Google technology for its search engine from 2001 to 2004, but then switched back to Yahoo’s system.
Masahiro Inoue, chief executive of Yahoo Japan, said that after a year of careful analysis, the company had concluded that it would ultimately benefit more from Google’s search engine than from Microsoft’s because of Google’s record in Japanese-language queries. Google has had a presence in Japan since 2001.
“At the present time, we feel there are quite a few areas where Microsoft is not yet ready,” Mr. Inoue said Tuesday at a news conference in Tokyo. “Google is one step ahead in Japanese-language services.”
Mr. Inoue said Yahoo Japan would pay to use Google’s search technology, while Google would receive up-to-the-minute content updates from Yahoo Japan, something he said would help Google search results stay timely. He did not offer financial details.
Still, by building its content on top of Google search results, Yahoo Japan will continue to compete with Google, Mr. Inoue said. The chief executive raised eyebrows when he told Nikkei Business Magazine in January that Google services, like Street View and Book Search, were “nothing impressive.”
“We’re switching engines to Google, but what we build on top of that will be exclusive to Yahoo,” Mr. Inoue said Tuesday. “That will continue to give Yahoo the edge.”
Yahoo Japan’s deal seems to mirror Yahoo’s overall goals, at least: to focus on the company’s strengths as a creator of Web content and as a marketer and leader in online display advertising, while tapping outside Web search technology.
The dominance of Yahoo Japan has been the product of its universe of content, spanning everything from online shopping and auction sites to pages devoted to news and stock market data. Unlike Google Japan’s simple landing page, the Yahoo Japan portal contains a large array of icons and links.
Microsoft’s Bing search engine, which tries to put search results in better context than its rivals do, has won favorable reviews. But as has happened elsewhere in the world, it has failed to gain much of a foothold in Japan.
Microsoft and Google have been vying for alliances with Yahoo for years.
In the spring of 2008, Microsoft made a $47.5 billion hostile offer to buy Yahoo after on-and-off talks about a merger had led nowhere. Google sought to torpedo the merger and began talks with Yahoo on an advertising partnership. They reached an agreement, but it was abandoned amid antitrust concerns in the United States. Microsoft ultimately walked away from its offer for Yahoo, and in June 2009 the two sides agreed on the search partnership.
Akira Kajikawa, chief financial officer of Yahoo Japan, said that Yahoo backed the Google deal announced Tuesday and that there would be no changes to Yahoo Japan’s relationship with Yahoo. Jerry Yang, Yahoo’s co-founder and former chief executive, will keep his seat on Yahoo Japan’s board, Mr. Kajikawa said.
In a blog post, Daniel Alegre, Google’s vice president for the Asia-Pacific region and Japan, described the deal as one that would bring benefits to both sides. Mr. Alegre also said the partnership highlighted a lesser-known part of Google’s business: the licensing of Google technology to rival search engines.
Yahoo Japan will “be able to customize Google search to provide its own search service, one that fits its own users,” Mr. Alegre said.
It is unclear what Yahoo Japan’s move might mean for the Yahoo brand in other countries. Softbank also owns shares in Alibaba Group, which operates the Yahoo portal in China.
Google was engaged in a lengthy confrontation with Chinese regulators this year over censorship issues and alleged hacking. The government recently renewed Google’s license to operate its http://www.google.cn/ Web site, although the company is now largely pointing users in mainland China to its site in Hong Kong, which is not censored.
NYTimes
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