Microsoft will try to block Google-Yahoo Japan deal

It plans to present evidence to Japanese competition officials that the deal is anticompetitive

A legal battle is brewing between Microsoft and Google for control of Japan's lucrative search market.

Microsoft will try to convince Japan's Fair Trade Commission that a search advertising agreement struck earlier this week between Google and Yahoo Japan will be harmful to competition, Microsoft said on Friday.

It had voiced concerns about the deal almost as soon as it was announced Tuesday, saying it gives Google too much control over Japan's search and search advertising markets. The deal means Google's search engine will be used to provide results for more than 90 percent of searches conducted in Japan.

“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. Department of Justice found to be illegal,” Microsoft said Friday in a brief statement to reporters.

Under the deal, Yahoo Japan will switch from Microsoft's search engine to Google's to power its search results. Yahoo Japan will also use Google's search advertising platform.

Microsoft has a broad search and advertising agreement with Yahoo in other parts of the world, but it doesn't extend to Yahoo Japan, which is majority-owned by a Japanese company, Softbank.

Microsoft said the deal will give Google "nearly complete control" of the Japanese search and search advertising markets. It compared it to a partnership that Google tried to strike with Yahoo two years ago in North America, but which they dropped because the Justice Department said it would probably be illegal.

Google insists the deal in Japan is different. Although Yahoo Japan will use Google's advertising platform, Google won't be providing the advertisements, Google said. And Yahoo Japan will be able to customize Google's search results and will continue to compete as an independent company, it said.

According to press reports from Tokyo, JFTC officials have said Google approached them about the deal before it was announced. The officials said they didn't see a problem so long as the companies run their businesses separately, the Wall Street Journal reported.

But Microsoft suggested in a blog post that the JFTC approved the deal without consulting advertisers, publisher and competitors to learn how it might affect competition. It is now going to ask it to reconsider its decision.

Tags advertisingYahooantitrustGoogleMicrosoftlegalinternetsearch engines

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James Niccolai

IDG News Service

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