Japan May Fund Search Engine to Rival Google, Yahoo

Worried that American companies — notably Google and Yahoo — are dominating a key part of the technology landscape, the Japanese government is considering starting up a rival search engine.

Reports out of Tokyo say the Japanese Ministry of Economy, Trade and Industry will convene a study group consisting of about 20 Japanese electronics companies and universities to look at the market for Web search engines. The government is reportedly poised to spend tens of millions of dollars over a five-year period starting next year in order to develop a robust rival.

Most major U.S. search engines have launched Japanese-language versions that operate in Japan, including Yahoo, Google, MSN and Ask Jeeves. Several smaller startups, such as Clusty and Vivisimo have also launched a Japanese version of their search platforms in recent months.

The government is eager to see a Japan-centric search engine launch, one that would likely not compete on foreign soil with the major search companies but could wrest back some of the domestic market share and advertising revenue now being rolled up by the large search firms.

Those involved in the study group include representatives of Matsushita Electric Industrial Co., NTT, Fujitsu, Hitachi and NEC, as well as Tokyo University. The group will hold its first meeting later this week and hopes to produce a preliminary report by March to be followed by a final report in July of 2006.

Build or Buy

Japanese interests certainly have the capabilities to build a search engine from scratch, and the resources they are dedicating to the effort should be more than enough to get the job done.

Another option would be to purchase a small search firm and use its technology to build a Japan-centric search tool.

The harder part may be winning market share. The development team will have to build technology superior to that of Yahoo, Google and others in order to convince users to make the switch.

“Search engine users aren’t terribly loyal, so a better or more targeted technology could make headway,” said Forrester analyst Charlene Li. Several studies have shown that users visit more than one search engine per month, which is one of the reasons that search giants often emulate each other in the competition for user loyalty.

Even more difficult — and likely to take more time — may be developing relationships with advertisers and intermediaries that provide the bulk of revenue for Google and others. Such companies will want to see that a search engine works before they begin advertising on it, Li pointed out.

United States of Search

Google’s rapid rise and its dominance of search — and, increasingly, other areas of the Web — have prompted concerns in other countries as well. Google Library and Google Print have sparked protests about the Web’s store of great books ignoring works in languages other than English.

Several European nations have spoken out against Google’s library digitization effort, and some have started their own rival efforts to ensure their countries’ native languages are well represented online.

The government of France has explored ways to forestall the Google juggernaut, Search Engine Watch Editor Danny Sullivan noted. One idea is to create a massive loan fund that could help fledgling Europe-based search concerns get off the ground. Many of them are already finding traction in the market, he said. If such a scheme should succeed, other countries might be inclined to follow France’s lead.

“It will be interesting to see if we’re about to have a trade war emerge in the search space over government backing, similar to the arguments that are made about government support given to aircraft makers Airbus in Europe and Boeing in the U.S.,” he remarked.