After much speculation, Yahoo Japan Corp. has agreed to use Google Inc.’s Internet-search technology in Japan.

Yahoo Japan will share its data from its auction and shopping sites with Google. Yahoo Japan will have to pay Google an upfront fee and a share of revenues from its search service.

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Microsoft Corp. struck a 10-year deal to combine its search business with that of Sunnyvale, California-based Yahoo! Inc, last year. It didn’t include an agreement in Japan, leaving Yahoo Japan to select between Google, Microsoft, and others at its discretion. “If Yahoo Japan started using Google’s search engine and if its services were then used on Android smartphones, an agreement may have big implications,” said Atsuo Takahashi, an analyst at Mizuho Securities Co. in Tokyo. “For Yahoo Japan, this deal could be quite positive.” Despite the name and ownership of a one-third stake, U.S.-based parent company Yahoo doesn’t control Yahoo Japan. Incidentally, Softbank Corp., Japan’s largest internet service provider and mobile operator, has a larger share of about 40% in the company.

Yahoo is the number one search provider in Japan, with more than 50 per cent share of queries, followed by Google, with Microsoft’s Bing a much smaller competitor. This makes the case of Microsoft even worse in Japan

Japan’s Fair Trade Commission confirmed the partnership. Regulators understood that while Google would be providing the search technology, the customer experience would be independent on both sites. Google’s search engine powered Yahoo Japan’s queries for a three-year period ending May 2004 when the Japanese site moved to use Yahoo’s own technology. Yahoo Japan will aim at switching over to Google for its “search” by year-end and then follow it with switching advertising systems.

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