In a recent report on the digital advertising industry, Japan's Fair Trade Commission (JFTC) prompted Google LLC to amend its business practices.
This decision was made after the commission identified that Google had imposed unfair constraints on Yahoo Japan, potentially distorting the competitiveness of the digital advertising market.
Unfair Trade Practices and Google's Commitment to Change
The JFTC's investigation revealed that Google's restrictive contracts with Yahoo Japan could potentially qualify as monopolistic behavior, hindering fair competition. This scrutiny began in 2022, with formal notifications of possible legal violations issued to Google in March of this year.
Following these findings, the search engine giant has proposed an improvement plan, which the JFTC has accepted, thus sparing the company from any fines or more severe punitive actions under Japan's antimonopoly laws, according to KSN.com.
As part of its commitment to address these concerns, Google has pledged to suspend certain technological restrictions imposed on Yahoo Japan for three years. This change aims to restore a more level playing field within the digital advertising domain.
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What the Case Tells Us
The root of the issue dates back to a 2010 agreement between Google and Yahoo Japan, whereby Yahoo was enabled to utilize Google's search engine and advertising technologies. However, modifications to this contract in 2014 led Google to prohibit Yahoo from distributing search-linked advertisements, imposing a seven-year restriction that lasted until 2022. This move left advertisers and portal site operators with no alternative but to depend on Google for search-linked ad placements.
Japan is Looking Forward For Ad Market to Be Competitive
The decision by the JFTC is a clear response to growing global scrutiny over the practices of large tech companies, mirroring actions taken by regulators in the United States and Europe. As digital markets continue to expand, with Japan's search-linked advertising market now exceeding 1 trillion yen ($6.5 billion), the need for fair competitive practices becomes increasingly critical, Kyodo News reports.
Google, in a public statement, acknowledged the JFTC's concerns but reiterated that it had not been formally found in violation of the law. Despite this, the company expressed its intention to implement the agreed-upon improvements diligently. Meanwhile, Yahoo Japan, which has since been rebranded as LY Corp., has opted to withhold comments regarding the ongoing issue.
While accepting Google's proposal for improvement marks a significant step towards addressing the issue, the JFTC has indicated that its investigations will persist, especially concerning allegations that Google may still be engaging in activities that prevent fair competition in search services. This ongoing scrutiny underscores the importance of maintaining competitive neutrality in the evolving tech sector.
Back in August 2023, FTC was tapped by children's advocacy groups following an alarming display of targeted ads to kids on YouTube. Despite prohibiting the prohibited advertisements to young audiences, Google still rolled them out.
