Microsoft Contests Google, Yahoo Japan Search Deal

Microsoft says it is challenging the Japanese Fair Trade Commission's acceptance of Yahoo Japan's search deal with Google. Google is powering Yahoo Japan's search and search ad platform, while Yahoo is switching to Microsoft Bing.

Microsoft July 30 said it planned to challenge the Japanese Fair Trade Commission's acceptance of Yahoo Japan's search deal with Google.

Yahoo Japan July 27 agreed to let Google power its search and search advertising platform despite the fact that its U.S.-based investor, Yahoo, is switching to Microsoft's Bing's search engine and ad platform in 59 countries around the world.

The SoftBank subsidiary's move stunned Microsoft, which is struggling to make inroads against Google's 65 to 70 percent search market share in the United States and abroad. Losing Yahoo Japan, the third largest Web market, to Google pains Microsoft.

But Yahoo Japan President Masahiro Inoue explained in a press conference that Bing was not strong enough for its needs, particularly regarding language localization.

Brad Smith, Microsoft's senior vice president and general counsel, compared Google's Yahoo Japan pact to Google's bid to partner with Yahoo in 2008, a deal that the Department of Justice struck down in November of that year for being anti-competitive.

"The 2008 deal would have locked up 90 percent of paid search advertising," Smith said. "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 spokesperson Andrew Pederson told eWEEK that Google and Yahoo Japan's advertisers and advertising data will remain entirely separate so as to avoid any impropriety or claims of anti-competition.

Indeed, Smith's comments prompted the Japanese FTC to defend its decision in a press conference July 28.

Takahide Matsuyama, secretary-general of Japan's Fair Trade Commission, contended that the fact that Google and Yahoo Japan are keeping their advertisers and ad data separate means there are no antitrust fears.

"In the U.S., the concern was that the companies would go from advertising competitors to collaborators," Matsuyama said in a statement, adding that the Japanese FTC will monitor the pact for compliance. "If they continue to compete for advertisers, the issue of changing your search engine is not an antitrust problem."

Microsoft disagreed in a statement e-mailed to eWEEK that echoes Smith's position:

""We plan to present evidence to the Japanese FTC explaining why we believe that this deal is substantially more harmful to competition than Google's deal with Yahoo in 2008 that the U.S. Dept. of Justice found to be illegal.""

Microsoft could sue to block any deal between Yahoo Japan and Google, though that may just delay the inevitable.