So how did Japan get so behind despite being on the bleeding edge in terms of most technologies? How is it that internet usage is can be so different? There are a lot of things at play here, but I have a theory: they are practicing internet isolationism. It’s the Tokugawa Era all over again, except this time it involves more LOLcats.

Japan’s First Big Isolationist Period

Let’s jump back a few hundred years. It’s 1641 and the Tokugawa family has gained control of Japan after a long, bloody war. In order to protect their newfound control, the new Shogun implements what is known as the Sakoku Policy. Basically, no foreigner could enter Japan and no Japanese person could leave Japan on the penalty of death. That being said, they actually allowed some foreigners (from Asia, mostly) to come to Japan to trade, but where they were allowed to go and what they were allowed to do was very restricted. It certainly was not the gay old times when everyone would sing songs together after crashing their boats off the Japanese coast.

There were a couple presumed reasons for this isolationism. First, the Shogunate was worried about foreign influence. Religion and colonialism were both a serious threat. Another reason was to keep the daimyo (basically like lords under the Shogun) down. Some of the Daimyo had pretty convenient trade routes with East Asia. Before Japan was unified under Tokugawa, these clans would use these trade routes to get rich and build powerful armies. In order to stay in power, the Shogun had to curb and control this trade so that he and only he got the main benefit from it.

Although Japan wasn’t totally cut off (just extremely restricted), it was quite isolated. During this time ship after ship was turned away. Sometimes they were even attacked. During this time the government built anti-ship defenses too just in case anyone got the wrong idea. You can see a giant list of attempts to trade with the Japanese government during this Sakoku Policy period. It certainly wasn’t easy.

After a while, though, the Western powers got pissed. Commodore Matthew Perry steamed into Edo Bay with four warships and showed off his big cannons so that the Japanese could know who was really in charge around here. A year later Perry came back with even more ships and Japan was all like “Okay, you cool. We can sign a treaty.”

The rest is history, as they say. So what about them Nyancats?

Isolationism In The Japanese Web

I should start by saying that the isolationism of the Tokugawa Era and the isolationism of the Japanese internet are two completely different situations. Of course, Japanese Internet Isolationism isn’t anywhere near as severe as the Sakoku Policy ever was (duh). It’s quite tame in comparison. It’s also more subtle, and not something that was instituted top down. Instead, the Japanese internet version of isolationism came from the bottom up. It happened naturally, slowly branching the Japanese internet off from the rest of the modern world.

The beginning of all this, I think, had to do with cell phones. The Japanese took to cell phones much faster than the West, staying way ahead of us for at least a couple of decades. Because of this, the Japanese didn’t take to computers like we did, and our internets took two very separate paths. Japan has been using the internet on their phones for a lot longer than us. Their infrastructure was made for it and the Japanese internet evolved accordingly.

One such evolution was the creation of services like i-mode. In i-mode, site creators actually make an i-mode version of a site to display that works well in cell phones. If there isn’t an i-mode version, for example, you can’t access it. It’s almost like a whole separate internet that you can only access from your phone. We experienced a very shallow version of this during the time before iPhones then smartphones became popular in the West.

Due to the speedy advancement of the Japanese cell phone internet infrastructure, the use of personal computers was a lot smaller. This means that the Japanese have seen the internet (as we know it, at least) for far less time than the West. It also means they’ve been (basically) using a different kind of internet than a lot of the rest of the world, aka a kind of internet that is very Japan-specific and somewhat isolated. This has caused web culture to develop separately as well causing a lot of the isolationist features you see in the Japanese internet today.

The Closed Japanese Internet

Perhaps the greatest example of isolationism in the Japanese internet comes from Mixi, one of Japan’s largest social network (as of 2008 it had 21.6 million users). It’s a lot like Facebook in that you share journal entries, thoughts, pictures, and so on. What makes it different is how closed it is. Due to the registration setup (you need a Japanese mobile phone email address to join) foreigners basically can never join unless they’re living in Japan and have a cell phone. As for as isolationist Japanese websites go, Mixi certainly takes the cake and has done so for a long, long time.

But it’s not just Mixi that does this. Gree and Mobage (the other two big social networks in Japan) also require Japanese mobile phone addresses to join. If you don’t have one, then you’re out of luck. Everything on the Japanese internet feels so closed, down to the users themselves. On Facebook using your picture and your full name is the norm. On Japanese websites it’s a rarity. There’s a level of anonymity on their web that you don’t see so much on the Western internet. In fact, 2chan (anonymous forum that 4chan came from) is from Japan. It doesn’t get much more anonymous than that.

This is all cultural, though. Like I said, this isolationism comes from the bottom up, not the other way around. It’s not wrong, it’s just different, and this has caused it to be very difficult for the big Western internet companies to break into the Japanese web. It’s like all those trading vessels that tried to land in Japan only to be turned away by the Shogun.

Of the big web companies to make it over to Japan, only a couple have stuck… and not even that much (though they are gaining traction, keep reading). Facebook had problems with its real name policy and real picture culture, causing it to see slower Japanese growth than it wanted or expected.

Google still lags way behind Yahoo Japan, though they recently pulled off a great deal where they took over all of Yahoo Japan’s search much like Bing did for Yahoo in America. Still, people visit Yahoo, not Google in Japan. Yahoo is the internet.

Speaking of which, Yahoo Japan is majority owned by Softbank, a Japanese internet company. It’s not even an American company, which probably explains why it did okay making the jump to Japan in the first place. Softbank knows what it’s doing over there.

Basically, if you’re in the internet, it’s hard to get into Japan. It’s closed, it’s different, and your Western trade vessels aren’t wanted here.

So Where Are Perry’s Black Ships?

If we’re going to pretend that the Japanese internet is like Tokugawa Isolationist Japan, where are Perry’s black ships? Who will come and flex some cannon muscles to get Japan open up their Internet for the rest of the world?

It’s not quite that simple, unfortunately. This isolationism has come from the people, not from the Shogun. No one person can open up the Japanese internet. It has to spread from person to person, slowly but surely allowing more and more outside internet in.

That being said, I think the black ships have already pulled into Edo Bay, metaphorically speaking. Google and Facebook have the best shot. After a bad year in 2010, Facebook made huge progress in 2011 (much to the thanks of the Facebook movie, supposedly, even though the Japanese thought Mark Zuckerberg was a hamburger). I’ve also seen a lot more of my Japanese friends join Facebook and add me as well. At the same time, Mixi is beginning to struggle. It’s having its MySpace moment. Twitter is probably the biggest success story. For the longest time, even before it was translated to Japanese, Japan was Twitter’s number two country in terms of users. It’s still very popular today, too. That being said, Twitter caters to you not having to use your real identity making it more acceptable to Japanese internet users.

As the Japanese people become more web savvy (at least on personal computers) we’ll see a lot of changes in the old internet guard. The Shogunate will crumble from within and we’ll see something interesting rise from the ashes. I think Facebook will start taking off and Google too. I don’t see all the Western internet companies getting a spot in the Japanese internet market, of course, but it will become more international. I think we’ll even see some trades, too. Japanese companies will make the jump to America and blow our socks off. Pixiv and Gree are a couple that come to mind, but more will wash up on our shores later.

But, the black ships have landed. They’re taking their time, though. They have to convince the individuals to open up, but once they get enough people on board it will snowball and hopefully allow Japan to show the internet world what they have to offer as well.

But have you heard about Yahoo! Japan? If you are like most people, you probably assume that they’re the same company suffering the same woes, though you’d be wrong on both accounts. Yahoo! Japan is both its own separate company and it’s doing really, really well. They probably sometimes use their name to shout their excitement at all the yens they’ve amassed. Yahoooooo!

But how in the world did this happen? Is Japan some kind of Bizarro World where Doraemon is evil and Yahoo is a successful company? Half of that is true.

Yahoo! Japan

The Yahoo! Japan corporation was launched on April 1, 1996 (not an April Fools joke) as a joint venture between the Japanese giant Softbank and America’s Yahoo, becoming the first web portal in Japan. At the time, Softbank owned 60% of the company and Yahoo had 40%. Though the percent of ownership has gone down for both companies, Softbank currently owns a majority share at 35.45%.

Because of these percentages, Yahoo! America and Yahoo! Japan went their separate directions. Although they both are kind of the same company in that they do similar things and have a similar name, the leadership and ownership is not. On top of that, the customers are different too, but we’ll talk about that a bit later. While Yahoo! America is bleeding employees and revenues, Yahoo! Japan has been extremely profitable, with net profits climbing each year since its inception. In 2011 its profits were 92.2 billion yen ($1.16 billion) and revenues were 292 billion yen ($3.7 billion)†.

The logical question here is to ask “why?” How has Yahoo! Japan been so successful and popular while its older sibling is obviously that alcoholic older brother that you want to help but you know he can’t be trusted after the last time he took your rehab money and spent it on some Captain Morgans. I don’t think the answer is simple, but let’s give it a shot.

The Relationship

First I want to start with the relationship between the two companies. This is where it all begins and where it all separates. Yahoo! Japan was supposed to be another Yahoo and in many ways it is. The main difference, as I mentioned before, is the management and the userbase. They could politely listen to their minority share holder Yahoo, smile, bow a bit, and then do something completely different.

For example, when big brother Yahoo! America partnered with Bing to do all their search stuff, Yahoo! Japan partnered with Google instead. Although Yahoo isn’t really competing with Google (or they say they aren’t), Google was a big part of Yahoo! America’s decline in a lot of ways. The “web portal” became obsolete when a great search came along. Perhaps partnering with Google is a great idea for Yahoo! Japan. Time will only tell. But this is one of those things that really shows that these two companies do things differently.

Another interesting part of the relationship between the two is the ownership in the companies. Yahoo! America owns nearly 35% of Yahoo! Japan. This is worth a lot of money. In fact, this ownership is worth almost 20% of all of Yahoo! America’s value. It’s rumored that they’re considering selling this stock back to help finance restructuring efforts, though we’ll just have to see what Marissa Mayer decides to do with that. The thing is, though, after Yahoo! America’s fall, Yahoo! Japan is actually the big fish in the sea, though just by a little bit. Its market cap is 19.4 billion dollars, whereas Yahoo! America’s market cap is a slightly tinier $19.12 billion. That’s kind of ridiculous when you consider the size of the possible userbase, and shows you the kind of relationship they have right now.

Different decisions and different leadership have gotten Yahoo! Japan to this point… at least that’s what most people say. I actually think it’s the opposite. It’s not Yahoo! Japan that’s doing a particularly good job, it’s the customers and users that they have. I believe that essentially Yahoo! Japan just lucked out, but that luck won’t last forever.

The Yahoo! Japan Users

I’m going to take the controversial position in all of this and say that Yahoo! Japan hasn’t done much of anything to make themselves so successful. Okay, I take that back. They haven’t particularly made any decisions that were so far different from Yahoo! America that justifies their success. In a nutshell, I give Yahoo! Japan 5-10 years before it starts its Yahoo! America slide, despite larger and larger profits every single year since its creation. I mean, things look great for them right now… but I blame that on Japanese Internet users for not being on the cutting edge, at least when it comes to personal computers.

Who Are The Users?

Well, pretty much everyone. Yahoo! Japan is Japan’s #1 site according to Alexa. Nobody else really comes close. This means Yahoo! Japan has a long way to fall. You know what they say: “the bigger they are…”

But that’s not a good reason on its own. It’s who these users are that intrigue me.

10 Years Behind?

I feel like Japan’s just now getting into the “web revolution.” I’ve already said their web design is so 2003, but if you think about it that was a pretty good time in Internet history for us too. That’s when the old guard of the web started breaking up and “Web 2.0″ began to appear. History tends to repeat itself. Remember when Yahoo was number one in America, too? It wasn’t that long ago. From all that I’ve seen from Japanese Internet users, they’re getting close to this stage as well. Current Japan 2012 is pretty close to America’s 2002, in terms of the Internet. Like I said, in 5-10 years and I think we’ll see Yahoo! Japan follow in the same route. Koichidamus hath spoken.

Competition

Lastly, there’s the competition. This isn’t about the users, exactly, except that competition gives users more choice. Now, one of Yahoo! Japan’s key advantages has been the near lack of competition. If a lack of competition does anything to a big company, it makes it completely oblivious to said competition until it’s way too late. This is what happened with Yahoo! America as well, though it had AOL to fight with for the “portal’ space. Sadly, it wasn’t portals they should have been fighting over. Web portals were replaced by search, all kinds of fancy Web 2.0 things, and social, losing both of those companies millions of customers. Yahoo! Japan’s in the same situation. I don’t think they’ll know what hits them when the competition finally does appear.

So what should they be worried about losing?

Yahoo! Japan Products

Yahoo! Japan has a few flagship products that really stand out. But, are they products that will allow Yahoo! Japan to sustain itself in the long term?

Yahoo Auctions

Yahoo! Japan’s auction website is the largest in Japan. Think Ebay. That being said, where is Ebay America now? They’re heading towards the gutters. With sites like Amazon in America, people are actually able to buy many new things for cheaper than on Ebay. Even Ebay has been trying to transition to the “buying new stuff” game, but it’s too little too late. While auction sites traditionally do great for a while, other shopping sites eventually catch up and let you buy new items for cheaper (with better shipping options too… thank you Amazon Prime!). This is the way of the Internet. I don’t believe that Yahoo Auctions, despite being the biggest Auctions site in Japan, will be a huge part of their future. Especially with the country being so small, shipping times can get pretty good. Look out for Amazon Japan and Rakuten in the future, I think they’re just getting started.

Yahoo Chiebukuro (Pearls Of Wisdom)

Think “Yahoo Answers” outside of Japan. Sure, some people use that, but it’s gone downhill as other Q&A sites pop up and bring you higher quality questions and answers. It’s only a matter of time (see “competition” above) until other Japanese Q&A sites start to chip away, which means fewer users and less advertising revenue.

Yahoo Mail

Do companies make a lot of money on mail? Maybe. Even in America Yahoo mail is one of the top providers (I think it’s #1 or #2, actually, Gmail is below that). has that helped them much? It doesn’t seem like it. Yahoo! Japan’s planning on monetizing email like Google is by scanning your email for keywords and advertising to you, but I’m not sure if that’ll be a big enough gain for them.

Yahoo News

This is probably Yahoo! Japan’s best bet for the future, I think. Good news is good. I don’t actually read Yahoo! Japan’s news, but I really do hope that it’s nothing like Yahoo! America’s news page. I really don’t need to know about the Kardashians every other news story.

Advertising

This is Yahoo! Japan’s bread and butter. It’s where all the money comes from (kind of like with Google in America). One thing I’ve noticed about Japanese users of the Internet is that they click on ads a lot. This reminds me of American Internet users ten years ago, actually. Over time we’ve become trained and have become more savvy. We know what’s an ad and what’s not. Fewer mistakes, which means we don’t click on ads as much as before.

The Japanese public hasn’t been on the desktop Internet for as long as we have (they are much more into mobile). When they become more savvy, I think we’ll see less and less ad clicks, causing revenues for Yahoo! Japan to go down. Perhaps they will continue to hold on to the advertising market and become the Google of Japan (if they’ aren’t already that). Perhaps Google will sweep in and upend Yahoo! Japan. We’ll find out soon, I’m sure.

Do They Have A Chance?

Probably. I’m just spouting out my opinion here and am almost certainly wrong on every account. Still, all I can see in Yahoo! Japan is Yahoo! America ten or so years ago. Things were looking alright and things were bright… then all of a sudden, boom! Yahoo goes down in a burst of fire.

I think really it’s going to come down to the culture of the users. American Internet users and Japanese Internet users are very different. Perhaps this could dictate the direction in which Yahoo! Japan goes. Will it go up, up, up? Maybe. Will it eventually fall? Almost certainly. My guess is that it will fall sooner, rather than later, but that’s up to the people using it. I will admit that Yahoo! Japan is infinitely more useful than Yahoo! America, but I also think that’s because of the lack of competition. Once competition starts injecting itself into the equation, which I think will happen soon, Yahoo! Japan will follow in its older brother’s footsteps. Hopefully more gracefully, though.

Of course, they could always hire on Hard Gay as their CEO if things go sour. I hear hiring and losing CEOs is the best way to make your company great again, ammiright Yahoo! America?

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† The Japan Times: Yahoo Japan: Same Name, Very Different Company