If only Yahoo had a dual-share register as well, then it might be possible to combine the worst of all worlds in its ownership structure. As it is, Yahoo pairs minority stakes with the disadvantages of cross-border partnership. The best aspect of Yahoo Japan’s decision to hire Google to run its search business is that it might speed the sale of Yahoo’s Asian assets.
Yahoo Japan’s choice of Google is a natural one, given that it had a similar arrangement early last decade. That, however, was a strategic mistake that enhanced the upstart competitor. Now that the Yahoo group has hived off search to Microsoft, the Japanese business also needs a new partner, even though it takes 55-60 per cent of Japan’s search market. Google, with 30 per cent of Japanese search – more than six times Microsoft’s share – was the obvious candidate.
Yahoo, which owns 35 per cent of Yahoo Japan, suffers little immediate economic impact. It should continue to receive search-related fees on an existing contract set to run to 2017. But the switch to Google limits the potential scale of the Yahoo-Microsoft search alliance, and points again to fraying relationships with the group’s Asian partners under chief executive Carol Bartz. The group’s early endorsement of Google’s stance in its showdown with China’s censors, for example, did not go down well with Alibaba, the Chinese group in which Yahoo also has a 40 per cent stake.