Yahoo! Japan Becomes Google Ally

Last week Yahoo Japan Corp, somewhat surprisingly, announced that Microsoft’s Bing won’t be powering its search, and that the company will use Google technology to run its search engine, instead. This is said to give Google almost absolute control over the third-largest search query market in the world.

By teaming up with Yahoo! Japan, Google will be delivering more than 90% of Japan's Internet queries. At the moment Yahoo! Japan uses search-engine technology developed by Yahoo of the U.S. So how could’ve Yahoo! let this happen? The thing is Yahoo! Japan is independent of Yahoo!, who owns only 35% stake, but they’d believed it would follow the US company. Microsoft, expectedly, was very critical of the proposed deal, which would definitely establish a search monopoly of Google in Japan: "Google's plan would cement its position as essentially the sole provider of search results in Japan for years to come," said Dave Heiner in a blog post, Microsoft vice president and deputy general counsel. "The proposed deal will eliminate search competition in Japan - in paid advertising and natural search results," Heiner added, "In fact, the competitive effects of the plan may be felt globally because Japan is the third largest generator of search queries in the world (after the United States and China). Google alone would decide what consumers in Japan will find, or not find, on the Web."

Hiroshi Naya, analyst at Ichiyoshi Research Institute, gave the following comments: "For Yahoo Japan it didn't really matter if it was Microsoft or Google because there were no capital ties to begin with. So maybe they felt more comfortable with a company that had more experience doing search in Japan." Yahoo! Japan is going to switch over to Google search engine by the end of the year, and then switch advertising systems later sometime. Microsoft, in its turn, will try to convince the Japanese regulators that the deal is adverse for competition and plans to take steps in that direction.