Yahoo Japan, Japan's largest Internet portal operator, said today it will adopt Google's search engine instead of teaming up with Microsoft like partner Yahoo Inc.
Yahoo Japan, which currently uses Yahoo Inc's search technology, and Google together would control the bulk of Japan's search market.
Yahoo Inc will remain a strategic partner for Yahoo Japan and will maintain its stake in the firm, while Yahoo Japan will continue to use the Yahoo brand, the Japanese firm said in a statement.
Yahoo Japan, which hopes the deal will strengthen its No. 1 position in the domestic market, will also adopt Google's search-linked advertisement delivery system and feed its data to Google sites.
In contrast, Yahoo Inc signed a 10-year deal with Microsoft in July 2009 to save hundreds of millions of dollars a year in expenses by shifting Web indexing chores to Microsoft while Yahoo focuses on improving searching.
Yahoo executives have said the company expects to complete integration of its search technology with Microsoft in all 59 countries in which it operates by the second quarter of 2012.
Yahoo Inc owns a little over a third of Yahoo Japan and is its second-biggest shareholder after Softbank Corp.
Yahoo Inc sought an alliance with Google before it teamed up with Microsoft, but gave up on the plan due to opposition from the U.S. government.
Yahoo Japan shares gained 1.2 per cent to 35,150 yen after reports of an imminent deal while the broader market was flat. The announcement came after the close of trade.