Thursday, 20 January 2011

Yahoo! Japan & Google Form Partnership

In the United States, Yahoos partnership with Bing has created a powerful force (often dubbed Bingahoo) that may just be able to hold its ground against Google. However, overseas, the reverse is happening thanks to a partnership between Yahoo! Japan and Google.

The partnership has been a while in coming, but was only recently able to get past an evaluation from Japans Fair Trade Commission, the group which ensures that no monopolies or unfair trades happen in the country. While Yahoo! Japan had verified that it was in line with the law as far back as July of 2010, there were some groups who were either critical or skeptical of the legality of the merger. Theres little doubt as to why there were initial concerns: After Google U.S. supplies the search technology for Yahoo! Japan, they will be supplying for nine-tenths Japans search volume.

Both Microsoft and Yahoo U.S. have raised some questions about the fairness of this partnership. The U.S. competitors werent the only groups upset, either. Rakuten Inc, a web-based domestic retailer in Japan, also raised concerns. However, with the approval of Japans FTC, little can be done to prevent the deal. Yahoo U.S., which owns only a third of Yahoo! Japan, is unable to put up a red light.

The stamp of approval is not permanent, however. Acknowledging the possibility for unfair competition down the line, Japans FTC has stated that they will continue to monitor the new Google/Yahoo entity, its behavior, and any monopolistic tendencies that arise.

While the decision may be controversial, its not unexpected. Analysts have been predicting this decision for quite some time. What is somewhat surprising, however, is the choice of Google over Microsoft. For Yahoo! Japan, the explanation was easy. Microsoft may work well for Yahoo! U.S., but they lack some important capabilities, such as language search, that are crucial in the Japanese market.

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