Microsoft to Contest Google/Yahoo Search Deal to Japanese FTC

Microsoft intends to protest a Yahoo-Google search partnership with Japanese regulators on grounds of anti-competitive behavior. The decision follows an announcement last week that Google and Yahoo Japan have agreed on a search technology partnership.

Similar to Microsoft and Yahoo’s search alliance in the U.S., the arrangement will see Google’s technology powering Yahoo Japan’s search product, with the pair splitting the resulting search ad revenue. Unlike the U.S. deal, however, the relationship will result in a single company dominating the Japanese search market, with Google technology accounting for around 90 percent of all queries conducted there, according to data from comScore. California-based Yahoo currently owns a 35 percent stake in Yahoo Japan, but the company is operated independently of its U.S.-based sibling.

In a blog post published last week, Dave Heiner, Microsoft’s VP and deputy general counsel, argued the deal would be detrimental to both Japanese advertisers and consumers, by eliminating competition between the two and granting the Google/Yahoo pairing almost exclusive access to users’ search data in the country. “This agreement is even more anti-competitive than Google’s deal with Yahoo in the United States and Canada that the Department of Justice found to be illegal,” he wrote.

In a statement e-mailed to ClickZ News today, Brad Smith, Microsoft senior vice president and general counsel, confirmed the company will lodge a formal complaint with Japanese regulators following a statement from Google that the deal has already been given the green light. “Yes, 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,” he said.

Microsoft and Yahoo agreed to a similar arrangement in the U.S. last year, though that deal will result in Microsoft representing only a 30 percent share of searches, a fact that helped its antitrust clearance from the FTC.

In 2008, however, the DOJ blocked a search partnership between Google and Yahoo, arguing it would “materially reduce important competitive rivalry between the two companies.” It is that decision which Smith and Heiner reference.