Microsoft denounced a web search partnership in Japan that would see its close partner, Yahoo!, tie up with industry Goliath Google. According to Microsoft, the partnership has antitrust implications, because it would give Google near-total ownership of the Japanese search market. In fact, Microsoft argues, this deal is even more anti-competitive than the proposed Google/Yahoo! partnership that the US Department of Justice (DOJ) blocked in 2008.
"Google's plan would cement its position as essentially the sole provider of search results in Japan for years to come," Microsoft Vice President and Deputy General Counsel Dave Heiner wrote in the company's official corporate blog. "In fact, the competitive effects of the plan may be felt globally because Japan is the third largest generator of search queries in the world (after the United States and China). At a time when competing search engines are scrambling to gain query volume, the billions of queries at stake in Japan loom large indeed."
Microsoft's worries center around the notion of search query scale. Currently, Google controls 51 percent of the search market in Japan, compared with 47 percent for Yahoo! If these two services combine together, it will create a single major player in the market, which seems simple enough. But with 98 percent of all search queries going through the same service, Google would "deprive competing search engines of the query scale that is essential if they are to improve their own search results in Japan." In other words, it's not just anti-competitive for the obvious reasons. It's also anti-competitive because it would harm both consumers and competitors over the long haul.
"The attempted Google/Yahoo! deal that the US Department of Justice found to be illegal [in 2008] was not nearly so far-reaching," Heiner continued. " Under that deal ... Google and Yahoo! would have continued to compete fully in natural search results, i.e., the core search 'product.' They would have continued to compete in monetization too ... and the entire deal was said to be non-exclusive."
The DOJ concluded that the 2008 Google/Yahoo! deal was illegal, forcing Google to abandon its plans just hours before the DOJ charged the firm with monopolization and restraint of trade. But this new deal, Microsoft claims, is even worse, because the companies would collaborate exclusively not just on core search but also on advertising monetization.
More broadly speaking, the software giant is accusing Google of entering into this agreement specifically to harm Microsoft, which has some precedent: Google actually admitted that its 2008 proposed deal with Yahoo! had less to do with ad volume than it did with providing Microsoft with "a setback." But this Japanese deal, Microsoft claims, is even more aggressive, aiming to push Microsoft right out of Japan.
Less insightful web pundits will try to drum up some irony around this charge. After all, Microsoft has limped through over a decade of antitrust-related rulings and settlements of its own. And now it's accusing another company of anti-competitive practices? But don't be confused by unrelated grandstanding while Google is trampling unimpeded over competitors in a lucrative new market, one that has sweeping implications for personal privacy and security. There are important concerns at stake here.