Following Tokyo’s increased control over digital platform businesses, the Japan Fair Trade Commission (JFTC) has taken its first action against the American-based search giant, Google LLC, for alleged unfair practices against its Japanese competitors.
In a statement released on Monday (April 22), the JFTC approved Google’s plan, in which the company committed not to restrict the provision of search engine and search link advertising technology necessary for mobile joint transactions to Yahoo! Japan. Additionally, Google will invite external experts for regular inspections and report on the implementation of measures to the commission annually for the next three years.
Yahoo! Japan is owned by LY Corporation, a subsidiary established in Japan by a joint venture between Japan’s SoftBank Group and South Korea’s Naver Group, operating Japan’s largest instant messaging app, Line.
The JFTC has been investigating Google’s provision of keyword-targeted search advertising technology to Yahoo! Japan. The commission stated in its announcement that the review indicated Google was disrupting fair competition in the Japanese advertising market.
The commission emphasized that the precondition for ending the investigation into Google’s potential misconduct is that the company must fulfill its latest submitted plan to the commission.
According to Nikkei Asia, Saiko Nakajima, head of the JFTC’s Digital Platform Investigation Department, stated at a press conference that many third-party websites are “forced to use Google’s services” due to this treatment. She expressed that this has had a significant impact on restricting fair competition.
Nakajima stressed that her organization is “very interested” in business trends related to digital platforms and will respond “appropriately and promptly” to any potential misconduct.
Following the JFTC’s notification, Google promptly submitted a resolution plan and stated in a Japanese-language statement on Monday that the company was not found to be violating antitrust laws but will ensure compliance with the approved commitments.
This move by the regulatory commission comes as Tokyo considers new restrictions on large tech companies.
Both Google and Yahoo! Japan provide advertising services in search results on third-party websites. In 2010, the two companies reached a collaboration agreement allowing Yahoo! Japan to utilize Google’s search engine and distribution system for keyword-targeted advertisements.
However, in November 2014, Google requested contract modifications, which limited the provision of search engine and related advertising technology for mobile joint transactions to Yahoo! Japan from September 2, 2015, to October 31, 2022, making it difficult for Yahoo! Japan to engage in mobile joint transactions.
According to Nikkei Asia, the Japanese government is poised to submit a draft law prohibiting monopolistic practices related to smartphone operating systems, such as restricting competitors’ access to their own app store platforms and payment systems, which could potentially impact American tech companies like Apple and Google.