Last week Yahoo! Japan confirmed that Google will be their local partner for search and ads. The announcement was made by the CEO of Yahoo! Japan, Masahiro Inoue.
Apparently, the deciding factor in this deal was the fact that Google’s services in the Japanese language were better than those of Microsoft.
The partnership is likely to come into effect next year.
While Yahoo! has a strategic partnership for search with Microsoft in the U.S. and other places, they are under no obligation to do so in Japan. This is because Yahoo! Controls only a 30% stake in Yahoo! Japan, while Softbank controls 40%. Since Softbank is the dominant partner, they are at liberty to select the partner.
At present Yahoo! Japan controls about 57% of the search market in Japan, while Google controls about 385. When these two ‘super powers’ join hands, they would effectively control about 95% of the market, potentially killing all competition.
Microsoft had to fight a similar situation between Google and Yahoo!, in the U.S. in 2008.
They had won that round thanks to the Anti-trust laws. They intend to do the same thing in Japan.
A Microsoft spokesperson has said, “We plan to present evidence to the Japanese FTC explaining why we believe that this deal is substantially more harmful to competition than Google’s deal with Yahoo! in 2008 that the U.S. Dept. of Justice found to be illegal,”
However, it is believed that it may not be very easy for Microsoft to win this battle in Japan, and the deal is eventually likely to go through.