ANALYSIS / Using rival's skill to get ahead Yahoo Japan hopes to optimize business resources in Google deal

Michihiro Kawashima / Yomiuri Shimbun Staff Writer

Yahoo Japan aims to improve the quality of its services with its recent decision to use Google Inc.'s search engine, a move that will cause the firm to rely on a rival company, according to analysts.

The partnership between Yahoo Japan and Google of the United States is indicative of the fierce competition in the Internet market.

The deal, announced Tuesday, means Google will dominate about 90 percent of the Internet search market in Japan. While both firms will use the same search engine, each company will provide services using its own information. "The competitive relationship will continue," Yahoo Japan said.

By utilizing Google's search engine, Yahoo Japan hopes to optimize its business resources. Yahoo Inc., which owns 34.7 percent of Yahoo Japan and is its second-largest stakeholder, suspended development of its search technology and now utilizes rival Microsoft Corp.'s Bing search engine, hoping to catch up with Google--the leader in the U.S. Internet search market.

Yahoo Japan considered using Bing, but went with Google because "Google is one step ahead [of Bing] in Japanese-language search services," Yahoo Japan President Masahiro Inoue said. Bing only launched Japanese search services in July and has yet to initiate a search-linked advertising platform in Japan.

A previous three-year partnership from 2001, in which Yahoo Japan utilized Google's search technology, might have affected Yahoo Japan's decision. The firm said the current contract is for two years and will be automatically renewed if neither company decides to cancel. Yahoo Japan will continue accepting capital investment from Yahoo Inc.

Although there are concerns the Yahoo Japan-Google alliance could hamper healthy competition in the Internet business, Yahoo Japan said it consulted the Fair Trade Commission before announcing the deal.

Even if technology comes from a rival company, "we'll use anything that benefits us," Inoue said. His comment shows Yahoo Japan's willingness to do whatever it takes to survive in the Internet industry.