Digital Garage Press Release

Digital Garage, Technorati, Inc. Strengthen Relationship

July 30, 2008

Digital Garage, Inc. (JASDAQ 4819; main offices in Shibuya ward, Tokyo; President and Group CEO: Mr. Kaoru Hayashi; referred to hereafter as "DG") and Technorati, Inc. (main offices in San Francisco, California, USA; President & CEO: Mr. Richard Jalichandra) are joining together to offer blog search and related services as Technorati Japan, Inc. (main offices in Shibuya ward, Tokyo; President & CEO: Mr. Kaoru Hayashi). Formed in January 2005, Technorati Japan has until now been a fully-owned subsidiary of DG, but with the new agreement will be a joint venture between DG and Technorati, Inc.

Along with the reorganization as a joint venture, Technorati Japan has also entered into a licensing agreement with Technorati, acquiring perpetual rights to the use of Technorati's blog search technologies. Based on this license, Technorati Japan will develop its own technologies targeting the specific needs of the Japanese market, further expanding the largest domestic blog search service targeting more than 10 million blogs.

Per my last blog post, this is a very important development for Digital Garage and Technorati. In the past, Technorati Japan has been operated as a marketing alliance, more like a typical distribution deal. While this worked better than a typical Japan entry structure, this new structure that gives the Japanese partner and the US partner equity stakes in single entity is typically much more successful at hiring people, making smart local decisions and moving quickly while continue to provide incentive to the US side to support the local efforts.

I'm really happy about this restructuring and am excited to see what we'll be able to do with the new configuration in Japan. Thanks to everyone who helped get this somewhat complicated transaction to happen.

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