14 DAY TRIAL // Microsoft is strongly criticizing a newly born search and online advertising alliance between Google and Yahoo in Japan. While Microsoft-Yahoo’s own marriage is unfolding in the U.S. and Canada, with the completion deadline set before the end of 2010, on the other side of the Pacific, Yahoo jumped in bed with Google. Controlled by Softbank Corp., Yahoo Japan will have its search advertising platform swapped for Google’s. Dave Heiner, Vice President and Deputy General Counsel, waned that is this move is allowed to go through it will severely impact consumer choice, by essentially eliminating competition for Google and reducing the number of ad platforms to just one. Yes, creating a monopoly. In addition, the natural search results on Yahoo Japan will also be served by Google, per the new agreement, leaving Google as the sole provider of both paid advertising and natural search results for the Nippon market.
“Today Google accounts for about 51% of paid search advertising in Japan. Yahoo Japan accounts for 47%. Their combined share of natural search results is almost as high. If Google is permitted to proceed with its plan, it would gain nearly complete control over search and search advertising in Japan through contract, not organic growth. Google alone would decide what consumers in Japan will find, or not find, on the Web. And Google will obtain massive amounts of data regarding the search history and Web sites visited by every consumer, business and government agency that conducts Web searches,” Heiner explained.
With Google controlling the vast majority of the Japanese search market there will be literally no room left to grow for rival search engines, such as Bing. Microsoft recently took the Beta tag off Bing Japan, and to have Google and Yahoo partner on the Nippon market is undoubtedly a heavy blow to the company’s investments in the land of the rising sun. Heiner emphasized that although apparently limited to Japan, the new alliance between Google and Yahoo will have a global impact.
“Google’s plan would cement its position as essentially the sole provider of search results in Japan for years to come. That is because if Google gains control over the roughly half of Japanese search queries that it doesn’t already control, it will deprive competing search engines of the query scale that is essential if they are to improve their own search results in Japan. In fact, the competitive effects of the plan may be felt globally because Japan is the third largest generator of search queries in the world (after the United States and China). At a time when competing search engines are scrambling to gain query volume, the billions of queries at stake in Japan loom large indeed,” Heiner added.
Back in 2008, Google pursued its own alliance with Yahoo in the United States, even if such a partnership seemed doomed from the get go. The U.S. Department of Justice ended up blocking the deal due to antitrust concerns, with the Redmond company noting that Google engaged into a strategy designed to block Microsoft from inking its own deal with Yahoo for as much as possible.
“Google abandoned its earlier deal with Yahoo in the face of the DOJ’s conclusion that it was illegal. The DOJ was reportedly just hours away from filing a federal lawsuit against Google that would have charged the firm with monopolization and restraint of trade. Less than two years later Google has entered into a deal that would turn its only major competitor in Japan into a collaborator, rather than a competitor, across natural search results and advertising. In doing so, Google has engineered a transaction that, once again, would deprive its search rivals of needed search query scale,” Heiner explained.
However, in Japan, antitrust authorities seem to not really have any issues with the Google and Yahoo alliance. According to the Redmond software giant, Google indicates that the Japanese Federal Trade Commission already gave the green light for the partnership to move ahead.
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