Yahoo Japan has chosen Google to power search and search advertising on its portal, a blow against Yahoo at a time when the Web company has ceded its own search platform to Microsoft.
The largest Web portal in Japan, Yahoo Japan is a subsidiary of cell phone and Internet service provider Softbank, which has a controlling 40 percent stake in the company.
Yahoo commands a 35 percent stake in Yahoo Japan. This will not change as a result of the new search deal, which should take affect by the end of the year, with the advertising system switch following in 2011.
What makes the new, non-exclusive arrangement so striking is that Yahoo has powered search across Yahoo Japan's properties to this point.
Yahoo Japan's decision to eschew incumbent Yahoo is a slap in the face to not only Yahoo, but Microsoft as well. Yahoo is in the process of integrating Microsoft's Bing search engine in the U.S. and 58 other countries.
Yahoo Japan President Masahiro Inoue said in a press conference July 27 that Microsoft's search technology was not sufficiently strong enough for its needs, according to Reuters.
Google's search engine will also get access to data from Yahoo Japan's auction and shopping sites.
While Google is powering Yahoo Japan's search advertising on the back end, the portal will continue to acquire and develop advertising campaigns, according to the blog post by Daniel Alegre, vice president of Asia Pacific and Japan for Google.
In securing Yahoo Japan's search business, Google has scored a major coup. Together, the companies would control most of the search market in Japan, the third largest search market after the U.S. and China.
The deal somewhat offsets Google's loss of search share to Baidu in China, after the company stopped censoring search results due to a disagreement with the country.