Big Tech's Era of Hardship... "Japan Plans Antitrust Administrative Action Against Google"

Yahoo Demands Ban on Use of Its Search Service
Despite Unilateral Notice, Yahoo Alters Existing Contract Terms
Big Tech Abuse Regulations Expected to Tighten

Japan's Fair Trade Commission plans to take administrative action to sanction Google's abuse of power in the digital advertising market, local media including Nihon Keizai Shimbun (Nikkei) reported on the 16th. Following Europe and the United States, it is expected that antitrust law violations will also hamper Google in Japan.

According to the reports, the Fair Trade Commission views Google's digital advertising service called "search-linked advertising" as violating antitrust laws. Search-linked advertising is a technology that displays ads related to the content users search for on the internet on websites.

[Image source=Yonhap News]

The size of the search-linked advertising market in Japan reaches 1 trillion yen (approximately 9 trillion won), with Google occupying 70-80% of it. Japanese IT companies Line and Yahoo also use Google's search engine and search-linked advertising services through cooperation with Google since 2010. These two companies not only sell ads directly on their own search sites but also operate an ad brokerage business between websites and advertisers, sharing revenue with website operators.

However, Google later demanded that Yahoo stop providing mobile-only search-linked ads to client portal sites, and Yahoo, technically dependent on Google, accepted and changed the contract terms. Nikkei pointed out that Yahoo likely feared losing access to Google's search engine if it refused.

The Fair Trade Commission began an investigation in 2022, considering that Google's actions might have violated antitrust laws. Subsequently, last month, under the "commitment procedure," the commission notified Google of the suspicion of violating antitrust laws. The commitment procedure is a type of administrative disposition by the commission, requiring the sanctioned company to prepare and present remedial measures. Accordingly, Google withdrew its request to Yahoo to stop ads and reportedly submitted its own improvement plan.

With comprehensive regulations on big tech companies being implemented not only in the United States but also in Europe, Google's business in Japan is also expected to face difficulties. On the 14th, Yomiuri Shimbun reported that the Japanese government is preparing the "Smartphone Competition Promotion Bill" to regulate monopolistic behavior by big tech companies such as Google and Apple.

This bill aims to prevent Google and Apple, which dominate smartphone operating systems (OS), from obstructing other companies' app store offerings and to allow users to easily change the initial settings of apps. It also prohibits prioritizing their own services over others in search results. Violations of the law will result in fines amounting to 20% of the violator's sales in Japan. The Japanese government plans to decide on the bill at a cabinet meeting within this month and pass it through the National Diet.