In a blow to Microsoft and its Bing search technology, Yahoo Japan Chief Executive Masahiro Inoue announced the move that would put Google in the driver’s seat for Japanese web searches.
Yahoo Japan currently conducts about 57% of all Web search queries compared to Google’s 38%. The combined total will put Google (GOOG) dangerously close to 100% of the search total.
But apparently Japan is cool with that. The deal was brokered ahead of time with Japan’s regulators and the two companies are confident it will go through regulators without issue. The regulators see that Yahoo still owning the portal gives them power to switch backend technologies at a later time.
Why not Bing?
Yahoo Japan is a joint venture between Yahoo! (30%) and Softbank,which carries a 40% share while various parties own the remaining 30%, so they aren’t beholden to their namesake’s deals.
According to the WSJ, Google Japanese language was just better than Bing’s.
“We had many discussions with Yahoo Inc. and in the end, they recognized that this was the right strategy for us in Japan,” said Mr. Inoue, who noted that Microsoft’s Bing was not “prepared” to handle some Japanese language services.
Google also has a larger advertising presence in Japan and would be able to better monetize the search results. Those won’t kick in until next year.
Yahoo (YHOO) originally used Google for its search engine from 2001-2004 before search was seen as a primary driver of ads and revenue. From 2004-2009 it used its own search engine to deliver results.
While Yahoo initially tried to go to Google for search usage and ads when Microsoft (MSFT) made strong buyout overtures last year, US regulatory intervention prevented such a deal. Yahoo then went to Microsoft and brokered a deal to use Bing in the US and Europe.
Yahoo Japan currently still uses Yahoo’s homegrown engine and was forced to find another solution when the Bing deal was reached and Yahoo decided to stop its own search effort.
Yahoo Japan rose 1.2% on the news, which included its quarterly earnings.