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Last updated: July 27, 2010 2:24 pm
The deal extends Google’s dominance of the global search market and cuts off another avenue for Bing to make substantial gains, as Yahoo – which owns 35 per cent of Yahoo Japan – struggles to increase revenues.
Last summer, Yahoo signed a 10-year agreement to use Microsoft’s Bing search technology elsewhere in the world.
The partnership is expected to come into effect this autumn. Microsoft is a distant competitor in the Japanese search market to Yahoo Japan, which handles more than a 50 per cent share of queries, and Google, which has more than a 30 per cent share.
Microsoft on Tuesday threatened to raise the deal with regulators. “It means there will be no search competition in Japan,” the company said.
Yahoo Japan will build its own services on top of Google’s “backbone”, which includes elements of its algorithms and web index, so search results from the two sites will vary.
“Our internet services are completely different from Google’s,” said Masahiro Inoue, Yahoo Japan president. It chose Google in part because its search engine was better at handling Japanese, he added. Nonetheless, the licensing agreement means that Google’s technology will underpin the vast majority of Japanese language search queries.
While European Commission regulators are investigating Google’s dominance of the market in Europe, Google said Japan’s Fair Trade Commission had made no objection to its deal with Yahoo Japan.
Daniel Alegre, Google’s vice-president for Asia-Pacific and Japan, wrote in a blog post that the two companies “will remain independent search and advertising providers, will not share any customer or pricing information, and will continue to vigorously compete in Japan”.
The non-exclusive partnership rekindles an earlier agreement between Google and Yahoo Japan that ran between 2001 and 2004.
Yahoo Japan will pay Google an upfront fee for use of its platform and a share of ongoing revenues from its search service under the deal.
Financial terms were not disclosed but Yahoo Japan is committed to using Google’s platform for a minimum of two years.
Yahoo, last summer, agreed to use Microsoft’s search technology across the rest of the world. The 10-year deal was praised by advertisers at the time as potentially providing a stronger competitor to Google.
Yahoo began testing Bing in its search results earlier this month.
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