Microsoft got some bad news this week when it found out that Yahoo Japan , unlike its U.S. parent company, will be partnering with Google , rather than Microsoft's search engine, Bing . The decision means that most of the Internet searches originating in Japan will use Google's search engine rather than Bing. Yahoo Japan is currently the leading search engine in Japan and handles over half of search activity.
Yahoo Japan CEO Masahiro Inoue said in a press conference that, "At the present time, we feel there are quite a few areas where Microsoft is not yet ready. Google is one step ahead in Japanese-language services."
In 2008, Yahoo proposed a partnership in the U.S. with Google, but dropped that effort after the Justice Department said it would block such a partnership due to antitrust concerns. Microsoft general counsel Brad Smith declared that the move would be even more anticompetitive than the U.S. partnership, saying that "Google will end up controlling all personal search information for all Japanese consumers and businesses."
The partnership is a blow for Microsoft. In 2008, Japan's Internet-using population was ranked the third largest in the world, after the U.S. and China. The market for search-related ads in Japan is estimated to increase over the next three years by 27 percent. Microsoft tried to purchase Yahoo Japan in 2008, but found the asking price too high.
Yahoo is not the majority shareholder in Yahoo Japan. That place falls to SoftBank, the largest computer and distributor in Japan. This is not the first time Yahoo Japan has partnered with Google. In 2001 the two teamed up in order to allow Japanese users to access Google search results.
The deal won't be challenged the way the U.S. partnership was, according to Yahoo Japan, which discussed matters with Japan's Fair Trade Commission before making the announcements. The government has confirmed that they do not believe the deal will violate Japan's antitrust regulations.