Microsoft, which partners with Yahoo in the U.S., is also out in the cold. Yahoo Japan's president Masahiro Inoue announced the decision Tuesday after his firm concluded that Microsoft's search technology was not strong enough for its needs in Japan, according to the Reuters news service. Yahoo Japan is 35% owned by Yahoo Inc., but that percentage wasn't enough to override the 40% stake owned by Softbank.
To complicate matters further, Yahoo Inc. has been outsourcing some of its search capability to Microsoft.
A possible antitrust problem -- Google and the new Yahoo search capability could represent as much as an 80% search market share in Japan -- has been cleared with the Japanese government, according to media reports.
Yahoo Inc. will remain associated with the Japanese affiliate as a strategic partner and will continue its financial stake in the Japanese unit.
Last year, Yahoo Inc. signed a 10-year agreement with Microsoft to shift web indexing to Microsoft while Yahoo improved its search capability. Still earlier Microsoft had offered by purchase Yahoo Inc. outright, but Yahoo's management at the time rejected the offer and Yahoo stock has still not recovered from the pre-offer price.