Yahoo! Japan selected Google as its search partner in Japan. It is suggested by commentators that this is contrary to how the parent company handled things. But let’s review:
- Microsoft won the Yahoo! search business only after: an attempted hostile takeover (though its arguable Microsoft was that serious about it as Yahoo!’s position as lead on a number of open source developments including PHP and Hadoop would raise anti-trust issues for Microsoft’s Windows, Server and Tools businesses) – this destablised Yahoo! causing a hemorrhaging of talent to Google and other players
- Microsoft then worked with shareholder activists (Carl Icahn) to unseat the board
- Microsoft also deployed lobbyists to have any potential Google deal declared an antitrust issue
- Microsoft gave Yahoo! Inc. a poor deal. No upfront cash and no real advantage
- Microsoft is in a monopoly position with its client Yahoo! Inc. Once the contract ends, Yahoo! can’t go to Google and Microsoft can name their own terms
- Microsoft has since closed Yahoo! out of distribution deals that it previously enjoyed
- Microsoft’s Bing search is still less relevant and provides a poor user experience compared to Google or even Ask’s Teoma. That is why Microsoft has had to buy search market share through the Yahoo! deal and through tool bar | search distribution deals
- Bing joins a legion of proof-points showing that the Microsoft innovation message put out as part of Microsoft’s core communications strategy is hollow. Yes, resources are given to innovation; but the outcomes don’t generally justify the term innovative ergo not innovation
- The Bing experience in Japanese is even worse
All of this would have been noted by Yahoo! Japan. However Yahoo! Japan has a number of shareholders to think of, and Yahoo! Inc. despite the commonality in the name is only a minority shareholder. Yahoo! Japan has an iron-lock in a number of sectors including local content, jobs, auctions, mobile and TV-based applications.
A poor consumer experience in search could let a competitor such as Microsoft or Google go after some if not all of these franchises. It would also affect Softbank’s broadband business and Yahoo! Japan’s mobile carrier | handset content relationships.
If Yahoo! Japan went along with a Microsoft search deal they would get screwed on the search revenue like Yahoo! Inc did. Why should Microsoft pay more for what they think they have coming to them already? Microsoft thinks that it has all the moves.
However, Yahoo! Japan – despite its name is a product of Japan, occupying one of Tokyo’s most prestigious business addresses, with a management team made up from some of Japan’s best entrepreneurs – at a time when Japan has little to be proud of in the technology sector.
All this at a time when Microsoft has come close to humiliating Japan’s Sony Corporation in the games console market and the disproportionate profit that Microsoft makes from Japanese computer makers through the monopolistic position of its Windows software licenses.
Then the Yahoo! Japan also has a compelling consumer argument in terms of the quality of the search experience. This could be a battle royale, pitting Microsoft money-fuelled lobbying and bluster against a Japanese national champion. And I hope that the Japanese cut Microsoft down to size.