JFTC to rebuke Google over Antimonopoly Law

The Japan Fair Trade Commission has been investigating Google LLC for an alleged violation of the Antimonopoly Law as it is suspected of demanding that Yahoo Japan, now LY Corp., limit part of its digital advertising business, it has been learned.

The JFTC is expected to soon issue an administrative action against Google, which would be the commision’s first against the tech giant.

Yahoo Japan announced a partnership with Google in 2010 and began using Google’s technologies, including so-called search advertising, which displays ads related to keywords.

Yahoo Japan used this technology to display ads on the portal sites of its customers and other business partners, but Google in the mid-2010s demanded Yahoo Japan stop displaying such ads on smartphones, according to sources.

Yahoo Japan complied with the demand.

The market for search advertising in Japan is worth more than ¥1 trillion. Google accounts for 70%-80% of the market and is far ahead of rivals in the technology.

Yahoo Japan is believed to have feared refusing the demand, in case it would not be able to continue using Google’s search engine and ad-related technologies. Yahoo’s customers and business partners may have experienced a decrease in revenue without search advertising.

The JFTC began its investigation in 2022 as Google’s demand may constitute private monopolization or an unfair business practice, which are both prohibited under the Antimonopoly Law. Google withdrew the demand the same year.

However, the JFTC determined that thorough prevention of recurrence was necessary to ensure the restoration of a competitive business environment. The JFTC in March notified Google of the suspected violation of the law in accordance with the so-called commitment procedure based on the law. Google this month submitted an improvement plan that outlines measures to prevent recurrence.

The commitment procedure enables the JFTC to order a company to submit improvement plans in order to normalize the business environment quickly. If the JFTC determines that the plan is sufficient, it will not find a violation of the Antimonopoly Law and thus will not issue a cease-and-desist order or impose fines.

The JFTC is also investigating Google on suspicion of pressuring smartphone makers to give priority to Google’s search application on their smartphones.