Tokyo -- An association between Yahoo Japan and Google may sound unlikely for all sorts of reasons, but Japan's Fair Trade Commission on Thursday sanctioned a local web-search alliance between Yahoo Japan Corp. and Google Inc., disregarding concerns raised by Japanese lawmakers and Rakuten Inc. that the deal could hurt competition.
Although Google, the world's biggest Internet search services company and Yahoo Japan, the country's top Internet portal, had expressed in July that it would select Google's search engine technology, as well as utilize its advertising and distribution system, while maintaining its current user interface, empowers the two firms control of almost all of the domestic search market in Japan, the FTC declared that the proposed deal does not present any problems under the Anti-Monopoly Law.
“The commission has concluded that at this point it is not necessary to continue investigating whether to take actions under the antitrust law,” the Fair Trade Commission said in a statement.
The move had sparked criticism from rival companies such as Microsoft and Japan's top e-retailer Rakuten Inc., which complained the association would give Google near-total control over the Japanese market, and have asked the FTC to investigate the proposed partnership, contending the arrangement would hinder competition.
Yahoo! Japan in July mentioned that it has about a 57% share of Japan's search market, the third-largest in the world, while Google had more than 30%, while Microsoft had around three percent. Nevertheless, the anti-competitive watchdog has blessed the alliance, but stated that it would continue to monitor the progress of the deal for any possible breaches of anti-monopoly laws.
However, Takujiro Kono of the Fair Trade Commission said according to Daisuke Wakabayashi, “We have not found any evidence that they are cooperating by sharing sensitive information such as ad pricing or any other problematic ways.”
The anti-competitive authority just intends to continue to monitor the two companies to make sure they doe not cooperate more than they should.
Hence, once the partnership materializes, Google's search technology will account for about 90 percent of the Japanese market. Yahoo Japan has already switched over to Google's search engine technology and it plans to begin receiving transmission from Google of the advertising display system linked to searches by summer 2011.
The antitrust officials apparently decided that it was a rational business decision for Yahoo Japan to choose Google's highly rated technology, which could be incorporated more quickly than technologies offered by other companies. The alliance is not anti-competitive, the antitrust watchdog said in a statement in Tokyo today.
“Competition between Google and Yahoo Japan, as well as others in the online advertising market, will remain vigorous,” Yoshito Funabashi, a Tokyo-based Google spokesman, said in a telephonic interview today. Masaki Hanyu, a spokesman for Yahoo Japan, said by phone the company plans to advance in its partnership with Google as planned.
“There is a danger that the alliance between the two will impede a healthy growth and development of not only the search industry but other domestic Internet services,” Hirotoshi Kato, a spokesman for Tokyo-based Rakuten, said in a telephone interview.
The two companies mentioned that they would establish firewalls around information about advertisers and fees to prevent leakage as well as limit the departments that would have access to that information.
Meanwhile, the European Commission last week said it had initiated an antitrust investigation into allegations that Google abused its dominant position in online search.