Yahoo Japan Tests Google Alternative as Contract Nears End
Updated: Jan 5
Yahoo Japan tests alternative search engine technology as contract with Google approaches expiration, exploring collaboration with Naver.
Yahoo Japan is exploring the possibility of transitioning its search engine technology provider, currently a Google affiliate, according to sources at Nikkei.
The company's contract with Google is set to expire in March 2025, prompting Yahoo Japan to initiate an internal technical test known as a "bucket test" to assess alternative options.
Z Holdings, the parent company of Yahoo Japan, has announced plans to merge Yahoo and LINE under a new entity called LINE Yahoo, slated for launch in October. The strategic move includes Naver, a leading South Korean Internet service provider, as the majority shareholder with over 60% share in the search market in their home country.
Naver is actively developing search technology infused with generative artificial intelligence, with the intention to export it to markets like Japan where LINE enjoys significant popularity. Observers are keen to see whether Yahoo Japan will switch its search engine provider to Naver, aiming to enhance management efficiency and leverage technical resources within the group more effectively.
According to Z Holdings' financial statements, Yahoo has been under contract with Google Asia Pacific since July 2010. The agreement allows Yahoo Japan to freely develop and integrate additional functionalities into its search results, differentiating itself from competitors.
In mid-May, Yahoo initiated bucket testing for select services, including search, to evaluate the impact of switching search engines. This involved conducting a small percentage of searches under unique conditions to assess the potential effects.
Responding to Nikkei's inquiry, Yahoo stated, "We have not disclosed the details of our contract with Google, including renewals. We constantly explore various measures and tests to improve our services. At this time, we are unable to provide further details regarding the implementation of the bucket test."
The Japanese government has been monitoring the potential consequences of Yahoo's switch from Google as it may have implications for consumer privacy protection and economic security. As search engines incorporating generative AI advance, the choice of search technology provider becomes increasingly significant.
Concerns have arisen, particularly in light of the merger between LINE and Yahoo, as LINE had previously allowed access to personal data of domestic users by a Chinese-affiliated company in 2021. Some members of the ruling Liberal Democratic Party express lingering distrust towards LINE Yahoo.
Considering Yahoo's actions, the government and the LDP are contemplating a system that would require search engine service operators to disclose significant changes to search engine specifications.
Yahoo Japan is considering a new search engine provider, currently supplied by a Google affiliate.
Yahoo's contract with Google expires in March 2025, prompting an internal technical test called a "bucket test."
Z Holdings plans to merge Yahoo and LINE under LINE Yahoo, with Naver as the majority shareholder.
Source: NIKKEI ASIA