Microsoft lead lawyer Brad Smith called Google's deal to power search and search ads for Yahoo Japan anti-competitive and compared it to Google's failed bid for a similar deal with Yahoo in the U.S. Google respectfully disagreed and chalked it up to fair business practices.
Microsoft's lead attorney railed against Google's deal to power search for
and Google was only to happy to respectfully disagree in a war of words.
a Softbank subsidiary of which Yahoo has a 35 percent stake, July 27 selected
Google as its provider
for search and search ad technology.
The arrangement, which replaces Yahoo, is expected to come to fruition by
the end of the year. More than that, it was a slap in the face for Microsoft's
Bing, which is powering search for Yahoo in 59 other countries. Yahoo Japan
said it preferred Google's technology over Bing.
It certainly didn't sit well with Microsoft, which opposed Google's June
search and search ads
for Yahoo in the United
Brad Smith, Microsoft senior vice president and general counsel, compared
Google's Yahoo Japan pact to Google's bid to partner with Yahoo in 2008
deal that the Department of Justice struck down in November of that year for
"This agreement is even more anticompetitive than Google's deal with
Yahoo in the United States
and Canada that
the Department of Justice found to be illegal," Smith said in a statement
e-mailed to eWEEK.
"The 2008 deal would have locked up 90 percent of paid search
advertising. This deal gives Google virtually 100 percent of all searches in Japan,
both paid and unpaid. It means there will be no search competition in Japan
and that Google will end up controlling all personal search information for all
Japanese consumers and businesses."
Google spokesman Andrew Pederson disagreed, pointing out key differences in
First, Pederson told eWEEK, Google will only be licensing its advertising
platform services to Yahoo Japan
and will not be providing ads for Yahoo Japan,
which will manage its own advertising system and advertiser relationships.
Google and Yahoo Japan's
advertisers and advertising data will remain entirely separate.
Second, Pederson said Yahoo Japan
will continue to compete as an independent online search and advertising
company. The company can customize Google's search service for their users. In
other words, Google isn't coopting Yahoo Japan
with its own look and feel.
He added that arrangements like these are commonplace without hindering
competition. For example, Toyota
sells its hybrid technology to Ford, even though they compete against one another
in selling cars.
For another, Canon provides laser printer engines to HP, despite competing
in the broader laser printer market.
Finally, Google said it and Yahoo Japan
have seeded the idea with the Japan Fair Trade Commission, which said it had no
objection to the proposed transaction.
"We believe this is the correct outcome for a number of reasons,
including the fact that the license will be non-exclusive, and both parties
will be free to explore better products and services and work with third
parties as they see fit," Pederson said.
"Competition between Google and YJC, as well as others in the online
advertising market, will remain vigorous because their advertising operations
will stay independent of one another, and there is competition with other
online advertising service providers."
Financial analysts see the deal as a veritable slam dunk for the search
giant, whose 65 percent U.S.
market share could be dwarfed by the share Google garners in Japan
thanks to the agreement.
"For Google, this is a big strategic win in the rapidly growing Asian
market, where it has faced investor concern due to its weakening position in China,"
wrote Susquehanna Research analyst Marianne Wolk in a research note July 27. "Furthermore,
it gives it a big leg up in mobile advertising as smartphone and mobile data
usage is high in the region."
Wolk believes the Yahoo Japan deal would add 1 percent to Google's net
She also acknowledged that this is a "major strategic blow to
Microsoft," which she said may seek to block the deal.