TOKYO Top Internet portal Yahoo! Japan on Tuesday announced a search alliance with Google, in a deal that would see both giants dominate the Japanese market in a possible blow to Microsoft.

The deal would see Yahoo! Japan switch to Google's search engine from the Yahoo! Inc. technology used previously. It will maintain its current user interface while also using Google's online advertising and distribution system.

“For Japan, we thought about what the best option would be and came to the conclusion that Google would be best for Yahoo! Japans growth,” said Masahiro Inoue, chief executive of the Japanese portal.

Yahoo! Japan is 40 per cent owned by telecoms operator Softbank, while Yahoo Inc. holds a 35 per cent stake.

It is therefore not directly affected by the Internet search partnership reached last year between Microsoft and Yahoo!, an alliance aimed at boosting competition with Google, which has two-thirds of the global market.

Inoue added that Yahoo! Inc chief and founder Jerry Yang gave him the green light to pursue the tie up with Google in Japan. “We dont think there is a problem of a monopoly,” he added.

However, if Yahoo! Japan and Google team up, Microsoft is likely to try to block the deal from gaining regulatory approval in Japan, Dow Jones Newswires said.

Yahoo! Japan currently has about a 57 per cent share of the search market and Google has about 31 per cent, Inoue said. Microsoft has almost a three per cent share.

The independently run Japanese company is not obliged to use Microsoft's Bing technology, which will power Yahoo! in the United States by the end of the year and will also be used in other countries where Yahoo! operates.

Yahoo! Japan said its net profit rose 12.6 per cent in the first quarter to 21.6 billion yen (248 million dollars) from last year. Operating profit went up 10.2 per cent to 37.5 billion yen on revenue up 4.2 per cent to 70.5 billion yen. - AFP