Google Yahoo Japan Deal Approved to Microsoft's Dismay

Google Dec. 2 won approval to power Yahoo Japan's search engine from Japan's Fair Trade Commission, a victory that has Microsoft worried about its prospects for Bing in that country.

Japan's FTC said the deal wouldn't violate antitrust rules as it currently stands because it is limited to a sharing of technology, according to the Wall Street Journal.

"We have not found any evidence that they are collaborating by sharing sensitive information such as ad pricing or any other problematic ways," said Takujiro Kono, head of the consultation and guidance office at Japan's FTC.

Yahoo Japan in July chose Google's search engine and search advertising platforms over counterpart platforms from parent company Yahoo and Microsoft, whose Bing search and AdCenter platforms are powering Yahoo in several countries.

Tapping Google will help the world's leading search engine command 90 percent of searches in Japan, an extraordinary number. Google's share of U.S. search is 66 percent, more than twice that of rivals Yahoo and Microsoft combined.

Microsoft argued then that the arrangement would actually give Google closer to 100 percent of search in Japan, sparking a major anticompetitive issue.  

The software giant, whose search engine Yahoo Japan said was not powerful enough to pick, maintained its argument in a statement sent to eWEEK  Dec. 2.

"Microsoft is disappointed that the JFTC decided not to initiate a formal investigation to review the proposed Google-Yahoo Japan deal. In the months since this agreement was announced, it has become clear that there is significant industry and public concern, particularly given the fact that Google will control nearly 100 percent of the Japanese search and search advertising market."

Microsoft said Japan's approval means it will have to think about its business plans in Japan going forward.

Google argued that the Japanese FTC's ruling is sound because Yahoo Japan will also continue to compete as an independent search and ad company.

"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," a spokesperson told eWEEK.

"Competition between Google and Yahoo Japan, as well as others in the online advertising market, will remain vigorous because our advertising operations will stay independent of one another, and there is competition with other online advertising service providers."

As 2010 winds to a close, Google is increasingly defending itself against allegations of anticompetitive behavior.

In Europe, search rivals claim Google is freezing them out on Google.com. In the United States, its offer to buy travel software specialist ITA Software is being challenged by travel companies and investigated by the Justice Department.