Yahoo Japan
Corporate History & Strategy

In the mid-1990s, the internet was entering a period of rapid adoption centered on the United States. SoftBank deepened its Silicon Valley connections through acquisitions such as Ziff Davis, and in the process noticed the growth potential of Yahoo, a Stanford University-born venture. Within Japan, comprehensive Japanese-language search portals were immature, and there was significant room to gain first-mover advantage.

Masayoshi Son invested in US Yahoo while proposing to advance deployment in the Japanese market through a joint venture structure. As a result, in January 1996, Yahoo Japan Corporation was established with 60% SoftBank investment and 40% US Yahoo investment. Starting with capital of ¥200 million, the company prepared to utilize the US Yahoo brand and technology.

For establishment, a license agreement was concluded with US Yahoo, securing exclusive rights to use the 'Yahoo!' trademark in the Japanese market. The consideration was a contract to pay 3% of gross profit as royalties, notable for being tied to the overall company's sales rather than limited to search services.

Meanwhile, a capital structure was adopted where SoftBank held 60% of voting rights, securing management control on the domestic side. Hiroshi Inoue from SoftBank assumed the role of Representative Director, clearly establishing a system for operating the business tailored to the Japanese market while utilizing US Yahoo's technology and brand.

Through the joint venture establishment, Yahoo Japan Corporation established a structure that, while being a Japanese deployment base for US Yahoo, operated in practice as a SoftBank-led internet company. This capital design became the foundation enabling subsequent domestic proprietary service expansion and rapid decision-making.

While bearing the constraint of royalty obligations, the foundation was established to grow presence in Japan's portal market using brand power and early entry advantage as weapons. The subsequent expansion into advertising, EC, and other businesses has its starting point in this 1996 capital and contract design at founding.

In April 1996, Yahoo Japan Corporation began providing the Japanese-language directory-type search service 'Yahoo! Japan.' The internet at the time was in its nascent period, and systematic organization of Japanese-language websites had not advanced. Search engines were also immature, and users had no means to reach target information.

To realize directory-type search, it was necessary to manually classify and register Japanese-language sites. Yahoo commissioned Indigo Corporation for this work, mobilizing student part-time workers to carry out registration. Manual preparation continued right up to launch, constructing the Japanese-language search infrastructure.

After service launch, Yahoo expanded content beyond search by adding news and weather information through alliances, aiming to transform into a portal visited daily. Rather than search alone, by bundling daily-access content, the company adopted a policy of stably increasing access numbers.

Advertising was set as the revenue source, with PV maximization as the clear management metric. Advertising rates were approximately ¥0.7 per PV, and impression-guarantee products and long-term placement discount products were introduced. The simple model of increasing access and selling advertising space was thoroughly implemented.

Through the integration of search and daily life information content, Yahoo! Japan rapidly expanded its user base. In 1997 it achieved 5 million daily PV, and in 2000 reached 100 million daily PV, growing into one of Japan's largest portals. It established an oligopolistic position and evolved into a medium with pricing power.

As a result, the advertising business achieved a high-profit structure, recording advertising sales of ¥12.2 billion and operating profit of ¥9.3 billion in the fiscal year ending March 2002. The launch of Japanese-language search and the PV-priority strategy became a decisive turning point forming Yahoo's revenue foundation.

Around 1999, expectations for electronic commerce through the internet were rapidly growing in Japan. Rakuten Ichiba started service in 1997, and the concept that even individual stores and small businesses could have online stores had begun to spread. As internet infrastructure improved, consumer behavior of comparing and purchasing products online was also gradually becoming common, and EC entry had become an unavoidable strategic challenge for major portal operators.

Yahoo at the time had traffic of tens of millions to 100 million daily PV, and was also considering diversification from its advertising-dependent revenue structure. There was an expectation that connecting massive traffic to retail sales could establish a new revenue source, while the question of how to differentiate as a late entrant with Rakuten already ahead was also a challenge.

In September 1999, Yahoo launched 'Yahoo! Shopping,' starting with 17 stores and approximately 15,000 products centered on major retailers such as Askul and Ishibashi Musical Instruments. The company prioritized recruiting branded stores and emphasized the reliability of a comprehensive mall. Meanwhile, the awareness of 'defeat Rakuten' was shared internally, and a policy of rapidly expanding scale as a late entrant was set.

In the same year, 'Yahoo! Auctions' was also launched, entering the CtoC market. Considering the trend of PayPal dominating the auction market in the US, it was judged necessary to secure a user base before US entry into Japan. A strategy was adopted of rapidly absorbing both sellers and buyers by keeping listing fees free until March 2001.

Yahoo! Shopping was initially limited in product variety due to its brand-focused store recruitment policy, falling behind Rakuten and Amazon in selection. Furthermore, with Rakuten strengthening store support through a sales force and Amazon improving the customer experience through logistics investment, Yahoo could not build a decisive advantage through traffic alone, and inferiority continued throughout the 2000s.

On the other hand, Yahoo! Auctions acquired an overwhelming user base through the free strategy and established an oligopolistic position in the domestic auction market. In April 2001, it transitioned to monetization by introducing a ¥280/month identity verification system, developing into a high-growth, high-profit business. Shopping and Auctions traced contrasting trajectories, with long-term impact on Yahoo's EC strategy.

NTT DoCoMo launched i-mode in February 1999, and by the end of March 2000 subscriptions had exceeded 5.6 million. The ability to browse the internet on mobile phones completely transformed conventional PC-centered internet usage, showing the potential of the mobile internet as a new market. A carrier-led official site model was forming, and information access via mobile phones was rapidly increasing, especially among younger generations.

Yahoo at the time boasted overwhelming PV in the PC portal space, but had no clear winning strategy in the mobile domain. How a portal company could demonstrate its presence in a structure where carriers held the reins was unclear, and cooperation with or absorption of external mobile-specialized ventures had become a leading option.

In September 2000, Yahoo merged with P.I.M. Corporation. The merger ratio was 1.00 for Yahoo to 0.056 for PIM, with PIM's valuation at approximately ¥5 billion. For a student-founded venture, this was a large valuation at the time and attracted market attention. It had the strong character of an advance investment anticipating full-scale entry into the mobile domain.

PIM had developed the mobile content service 'Dosule!,' quickly acquiring 30,000 users. Yahoo's Kwan Sato and others evaluated its potential and decided on a merger incorporating the entire organization. Young talent including Kentaro Kawabe and Shin Murakami also transferred to Yahoo, drawing expectations as core candidates for mobile strategy.

However, in the mobile market, carriers such as NTT DoCoMo and KDDI held the reins, and Yahoo could not establish a clear position. Dosule! could not find direction and ended, failing to achieve results as a PIM business. Immediately after the merger, roles within the company became ambiguous, and it is said to have entered a period of effective stagnation.

Nevertheless, the talent remained at Yahoo, and when Manabu Miyasaka became president in 2012, Kawabe and Murakami were promoted to management core positions. As a result, a structure was formed in which PIM alumni led Yahoo's reforms in the 2010s. The mobile-oriented thinking itself was prescient, and with a time lag it influenced the organization's direction.

Hiroshi Inoue, who became president in 1996, elevated Yahoo to a domestic top company centered on portals and advertising. However, from 2009 onward, adequate response to the rapid spread of smartphones could not be made, and growth decelerated. Particularly in the mobile domain, Yahoo fell behind, and stagnating sales were compounded by declining advertising rates and the rise of new entrants.

From FY2008 to FY2011, revenue growth stagnated and the momentum of the once highly profitable company faded. Masayoshi Son of SoftBank, a major shareholder, judged that the existing structure could not adapt to the smartphone era and decided on a president change and executive overhaul. It was a phase where transformation speed was prioritized over management continuity.

Inoue served as president for 16 years, but the delay in mobile strategy was undeniable. Son chose to clarify management accountability and pass the baton to a new generation. Yahoo faced its first genuine generational change and strategic transformation since its founding.

In April 2012, by Masayoshi Son's appointment, Manabu Miyasaka (then 44) became CEO. Inoue completely stepped down with the June shareholders' meeting, and management control transferred to the new administration. Miyasaka, who had joined in 1997 and worked on profitable businesses such as Auctions and News, was a practitioner promoted from within, a bold reform through internal promotion.

Simultaneously, the executive officer structure was overhauled nearly in its entirety. Reappointments were extremely limited, and a formation centered on young people selected with 'being a smartphone enthusiast' as the standard was assembled. Mobile-oriented talent such as Kentaro Kawabe and Shin Murakami were placed in core positions, and the center of gravity of decision-making shifted at once.

Miyasaka immediately after taking office declared 'explosive speed management' and decisively simplified approval processes. The aim was to restore speed to the organization that had ballooned to approximately 5,000 people, with a cultural transformation toward thorough delegation of authority and rapid execution. The catchphrase spread through media and was recognized internally and externally as a symbol of reform.

The pillar of reform was 'concentrated investment in strong services.' Of approximately 150 services existing in 2012, it was judged that competitive ones were limited to about 20, and managers were granted strong personnel authority to redeploy people. Weak services were sorted through reduction or partnership, and management resources were directed toward smartphone-focused flagship businesses.

In Shopping and points, the self-reliant approach was reconsidered, and in June 2012 a capital and business alliance was concluded with CCC to advance cooperation with T-Point. Also partnering with Askul to supplement logistics functions, the direction shifted toward utilizing external resources. The helm shifted from comprehensive in-house deployment to reconstruction premised on cooperation.

Explosive speed management was not merely a slogan but involved changes in organizational culture and resource allocation. Thereafter, Yahoo accelerated expansion of smartphone-compatible services and established the foundation for deploying a re-growth strategy spanning advertising, EC, and payments. It was a turning point where the management generational change was tied to strategic transformation.

Yahoo! Shopping, started in 1999, had long been at a disadvantage under the offensive of Rakuten and Amazon. Even after the 2012 explosive speed management, inadequate competitiveness in the shopping domain remained as a challenge for Yahoo, and fundamental reform was demanded. In July 2013, Takao Ozawa was appointed as Executive Officer Shopping Company Head, establishing a structure for leading the rebuilding.

Ozawa had a career of founding the used goods trading service BizSeek, selling it to Rakuten, and then serving as an executive officer there. A talent well-versed in EC practice and management, he was deployed by President Miyasaka specifically to the competitive front line. Having experience with EC at Rakuten in the past raised issues of good faith, but it was a personnel decision prioritizing business rebuilding.

In October 2013, Yahoo announced 'e-commerce revolution,' deciding to make Yahoo! Shopping's monthly store listing fees and sales royalties free. It was a bold measure eliminating fixed and variable costs, aiming to expand the number of products by lowering store entry barriers. Payment fees were only reduced but not eliminated, but it was effectively a price disruption.

Simultaneously, store listing fees and listing fees for Yahoo! Auctions were also made free, as a countermeasure against the growing Mercari. President Miyasaka expected revenue impact of tens of billions of yen per quarter but prioritized expanding total transaction value. It was positioned as a structural reform to convert revenue sources from fees to advertising.

After the announcement of free listing, the number of stores on Yahoo! Shopping rapidly increased from approximately 20,000 to approximately 80,000. The increase in number of products improved the mall's appeal and led to improved traffic. The foundation was established to shift from the conventional SaaS-type revenue model to a model centered on advertising sales.

The main buyers of advertising were registered stores, purchasing advertising space for the purpose of improving exposure within the mall. However, stores able to actually utilize advertising were limited to a portion of the total, said to be about 10% as of 2017. Nevertheless, the expansion of distribution scale became an achievement symbolizing Yahoo's EC strategy transformation.

Throughout the 2000s, Yahoo had demonstrated presence in the CtoC domain through 'Yahoo Auctions,' but fell behind Rakuten and Amazon in the BtoC retail domain. Particularly, Amazon had raised delivery quality through massive investment in proprietary logistics bases, and Rakuten was also promoting a logistics integration plan, with the axis of EC competition shifting from 'traffic power' to 'logistics power.' Yahoo had daily traffic exceeding 100 million PV, but did not have its own base for stably and quickly delivering products.

When Manabu Miyasaka became president in 2012, EC strengthening was positioned as a priority agenda alongside the smartphone shift. However, building a logistics network from zero requires time and capital, and considering revenue responsibilities as a listed company, sole investment was not rational. So Yahoo explored a strategy of supplementing logistics functions through partnerships with existing players rather than a self-reliant approach.

Askul emerged as the target. Askul had a nationwide 6-base logistics network built through BtoB mail order, and in 2012 had started the daily goods EC 'LOHACO.' For Yahoo, there was the potential to build a counter-axis against the Amazon-type model by receiving Askul's logistics functions and product procurement capability in exchange for providing traffic and payment infrastructure.

Yahoo invested ¥32.9 billion through a third-party allotment of new shares to Askul in April 2012, acquiring approximately 42% on a voting rights basis. This launched a business and capital partnership, establishing a structure for jointly promoting expansion of the LOHACO business. Initially it was a picture of pursuing synergy through cooperation while maintaining independence as an equity-method affiliate.

However, as EC competition intensified, it was judged that more rapid decision-making and capital injection were needed for LOHACO's growth. So in June 2015, Yahoo decided to implement additional investment and make Askul a consolidated subsidiary. The 'parent-subsidiary listing' format was chosen where Askul remained listed while making it a subsidiary, a structure that maintained market fundraising functions while increasing control.

This decision was a management decision with EC strengthening as the top priority, but simultaneously embedded governance issues. The issue of how far a controlling shareholder like Yahoo could align the interests of minority shareholders was a harbinger that would become a future focus.

In 2017, a fire occurred at Askul's logistics base, and the LOHACO business took a blow. Amazon also strengthened its daily goods domain, and price competition and logistics investment competition intensified further. LOHACO grew sales but continued operating losses, and because it was a consolidated subsidiary, it also affected Yahoo's performance.

From 2018 onward, Yahoo proposed transfer or restructuring of the LOHACO business, but Askul management refused this. Eventually at the 2019 shareholders' meeting, reappointment of Askul's president was rejected, resulting in management intervention being executed by the parent company. During this process, 'parent-subsidiary listing governance' became a subject of social discussion, and the Japan Association of Corporate Directors also published a statement of opinion.

As a result, Yahoo maintained its control over Askul, but market doubts were raised about governance posture. The capital policy aimed at EC strengthening had rationality as logistics strategy supplementation, but surfaced the issues of minority shareholder protection and controlling shareholder responsibility. The Askul consolidation became a symbolic case where growth strategy and corporate governance intersected.

From 2018 onward, in Japan's QR code payment market, PayPay launched by SoftBank and Yahoo, and LINE Pay deployed by LINE, competed fiercely investing massive promotional budgets. PayPay rapidly expanded users through large-scale cashback campaigns, while LINE also invested marketing costs in response, with both companies posting losses of ¥10 billion scale and falling into an attrition war. The market expanded but the profit structure remained impaired.

At the same time, Yahoo Japan Corporation's standalone performance was struggling. Consolidated sales expanded through consolidation of Askul and Ikyu, but organic growth of existing services was limited. The shift from advertising-dependent structure did not progress, and the gap with Rakuten and Amazon in EC also did not close. A picture of growth depending on M&A rather than self-generated growth was becoming clear.

As a result, for SoftBank Group, the picture of its subsidiaries Yahoo and LINE competing in the same domain and both expanding losses was not rational. It had entered a phase where competitive advantage could not be built without simultaneously achieving scale expansion and cost reduction through integration of payments, advertising, and EC. The choice between continuing competition or redesigning through integration was being forced.

In October 2019, Yahoo Japan Corporation changed its company name to Z Holdings and announced management integration with LINE. The integration adopted a holding company structure rather than absorption merger, with a structure placing Yahoo and LINE under it. The effective integration ratio was set at 50:50, with a design formally emphasizing equality.

After integration, the joint investment company of SoftBank and NAVER held approximately 65% of Z Holdings shares, and the general shareholder ratio was limited to approximately 35%. This secured management stability while embedding the issues of declining stock liquidity and concentration of controlling shareholder influence. The balance between governance as a listed company and parent company intentions became a questioned structure.

Also, Yahoo's brand use was limited to domestic due to a license agreement with US Yahoo, and overseas expansion on its own had constraints. LINE had an overseas user base, and by depicting a division of roles of 'Yahoo domestically, LINE overseas' through integration, a concept was shown to effectively bypass the license constraint. Simultaneously resolving competition cessation and structural problems was the aim.

Even after management integration, Yahoo and LINE continued to maintain brands, headquarters functions, and organizational culture, with the manifestation of integration effects limited. Sorting of overlapping services proceeded cautiously, and even management department integration took time. In the payments domain, LINE Pay's presence gradually declined and consolidation into PayPay advanced, and the initially equal structure changed substantially.

Furthermore, with brand rights purchased from the former US Yahoo, Yahoo's solo overseas expansion also became theoretically possible, and part of the integration rationale at the time of integration retreated. As a result, the integration carried a stronger character of competition cessation and capital restructuring rather than immediate synergy creation. It had a distinctly defensive integration character rather than growth acceleration.

In 2023, merger of ZHD subsidiaries Yahoo and LINE was decided, and 'LINEYahoo' was born. Management leadership also shifted to LINE-side talent, and the former Yahoo-led structure receded into the background. Integration did not complete in one round but became a process of repeated reorganization. It became a case demonstrating the difficulty of large-scale platform integration and the superiority of capital logic.

ZOZO Corporation was founded by Yusaku Maezawa in 1998 and achieved rapid growth centered on fashion EC 'ZOZOTOWN.' After listing on TSE Mothers in 2007, market capitalization expanded to hundreds of billions of yen scale, growing into a leading Japanese fashion EC company. However, entering 2019, revenue growth slowed and criticism of the private brand strategy also accumulated, reaching a business inflection point.

At the same time, Maezawa showed a posture of prioritizing personal activities such as space travel and high-priced art purchases, deciding to resign citing 'a fresh start in life.' Furthermore, it became clear that a significant portion of his shares had been pledged as collateral to financial institutions, and the method of disposing of large holdings became a market concern. The founder's shareholding ratio remained high, and separation of management and capital was unavoidable.

Few companies could accommodate shares on a scale of hundreds of billions of yen. Maezawa consulted with SoftBank founder Masayoshi Son, and through this route a meeting with Yahoo (at the time) President Kawabe was realized. Thus Yahoo emerged as the recipient of ZOZO shares, and capital restructuring involving transfer of management control simultaneously with the founder's departure took on real prospect.

In September 2019, Yahoo (Z Holdings) announced a tender offer for ZOZO shares. The acquisition ratio was set at 50.1%, with the decision premised on making it a consolidated subsidiary. The acquisition price reached a total of approximately ¥400.7 billion, with funding secured through approximately ¥400 billion in short-term borrowing from financial institutions. It was also a transaction with a strong character as part of SoftBank Group's strategic investment.

Setting the acquisition ratio at a majority is presumed to have been motivated by the intention to directly incorporate ZOZO's sales into group performance by making it a consolidated subsidiary rather than an affiliate. With the company's own EC struggling, the aim of expanding EC transaction total by bringing a strong apparel-specialized mall under its umbrella was clear.

Meanwhile, ZOZO maintained its listing, choosing the parent-subsidiary listing format. It was a decision tolerating the control structure of SoftBank → Z Holdings → ZOZO and aiming for a conglomerate-type group structure. The choice of maintaining listing rather than making it a wholly-owned subsidiary also embedded future governance challenges including capital market relationships and minority shareholder treatment.

Simultaneously with the tender offer, Maezawa resigned, and Kotaro Sawada, who had been a director, became president. Taking the Askul integration friction as a lesson, Yahoo chose continuation of management by an insider rather than full external intervention. In PMI, a structure was built to respect a degree of independence while aligning with group strategy.

Under the Sawada administration, 'More Fashion' and 'Fashion Tech' were advocated, clearly focusing on the apparel domain. The private brand business that had progressed under the previous administration was terminated, and steps were taken to encourage brands that had left to return, prioritizing restoration of trust as a mall. Technology investment and reconstruction of the store-opening base were advanced as axes for rebuilding profitability.

As a result, ZOZO became a core presence in Z Holdings' EC strategy, forming a picture of serving as a complement to the Shopping business. However, because parent-subsidiary listing was maintained and the acquisition was through massive borrowing, capital efficiency and governance compatibility remain as ongoing management challenges.