Microsoft cries foul over Google-Yahoo Japan pact

IDG News Service - Yahoo Japan's decision to replace Microsoft with Google as its main search partner has been met with protest from Microsoft, which called the deal "anticompetitive."

"This agreement is even more anticompetitive than Google's deal with Yahoo in the United States and Canada that the Department of Justice found to be illegal," Brad Smith, Microsoft's general counsel, said in a statement sent to reporters. "The 2008 deal would have locked up 90 percent of paid search advertising. This deal gives Google virtually 100 percent of all searches in Japan, both paid and unpaid."

Microsoft declined to say if it will try to challenge the deal on legal grounds. Smith was referring to an advertising agreement that Google and Yahoo were considering in 2008. They abandoned it after the DOJ said it would try to block the deal on antitrust grounds.

Earlier Tuesday, Yahoo Japan said it had signed a deal with Google to provide it with search and related advertising services. The deal should see Google providing search results for Yahoo Japan by the end of the year.

The deal raised eyebrows because Microsoft and Yahoo have a broad search and advertising partnership in the U.S. and many other countries, intended in part to help them compete better against Google.

That deal doesn't extend to Japan, however, where Yahoo owns only 34 percent of Yahoo Japan. The majority is owned by Japan's Softbank.

According to Microsoft, the deal means there will be "no search competition in Japan and that Google will end up controlling all personal search information for all Japanese consumers and businesses."

Google argued that the deal differs from the one in 2008 that Smith referred to. It also said it had consulted with the Japan Fair Trade Commission "and confirmed that the JFTC has no objection to the proposed transaction."

Yahoo Japan is licensing Google's advertising platform, but it will manage its own advertising system and advertiser relationships, and the companies' advertising data will be kept separate, Google said.

Also, it said, Yahoo Japan will still compete as an independent search and advertising company, and it will be able to customize Google's search service so that end users get a different experience from the one on Google's own site.

Yahoo operates some of the most popular websites in Japan. In May they were visited by almost nine out of 10 Internet users in the country, according to recent figures from comScore.