Yahoo Japan is exploring the possibility of switching its search engine provider. Currently, the search engine technology is supplied by Google, but with the contract set to expire in March 2025, Yahoo Japan is actively testing alternatives.
The company has initiated an internal technical test, known as a “bucket test,” to evaluate the performance and potential of different search engine technologies. This test involves running a small percentage of searches under unique conditions to assess the impact of switching providers.
This exploration comes as Z Holdings, Yahoo Japan’s parent company, plans a significant merger. Yahoo Japan and LINE will be combined under a new entity named LINE Yahoo, scheduled to launch in October. Naver, a major South Korean Internet service provider, will hold a significant role in this new entity, as it is the majority shareholder with over 60% of the search market in South Korea.
Naver is currently developing search technology enhanced with generative artificial intelligence. This cutting-edge technology is intended for markets like Japan, where LINE already enjoys substantial popularity. The potential integration of Naver’s AI-driven search technology into Yahoo Japan’s operations is seen as a strategic move to improve management efficiency and leverage the technical resources within the group more effectively.
Yahoo Japan has been under contract with Google Asia Pacific since July 2010. This long-standing agreement has allowed Yahoo Japan to develop and integrate additional features into its search results, providing a unique user experience that differentiates it from competitors.
The recent bucket testing is part of Yahoo Japan’s broader strategy to ensure that any transition away from Google does not disrupt its services. The company’s statement, in response to inquiries, emphasized that details of the contract with Google, including renewal terms, have not been disclosed. Yahoo Japan reiterated that it continually explores various measures to enhance its services but did not provide further details on the bucket test’s implementation.
The Japanese government closely monitors these developments, particularly the potential switch from Google. There are concerns about the implications for consumer privacy protection and economic security. The rapid advancement of search engines incorporating generative AI makes the choice of search technology provider increasingly significant.
The upcoming merger between LINE and Yahoo Japan heightens these concerns. In 2021, LINE faced scrutiny after it was revealed that a Chinese-affiliated company had accessed personal data of Japanese users. This incident has led to lingering distrust, particularly among members of the ruling Liberal Democratic Party, who are wary of the new LINE Yahoo entity.
Given these developments, the Japanese government and the Liberal Democratic Party are considering implementing a system that would require search engine service operators to disclose any significant changes to their search engine specifications. Such a system would aim to ensure transparency and maintain public trust in the search engines widely used by consumers.
As Yahoo Japan considers its options, the decision on whether to switch search engine providers could have far-reaching implications, both for the company and for the broader landscape of internet search in Japan. The next steps in this process will be closely watched by industry observers, government regulators, and consumers alike.