Google's Betrayal and the FTC's Investigation
The Fair Trade Commission (FTC) of Japan felt deceived by Google LLC's actions a few years ago, according to a source within the organization. The FTC had approved Google's business partnership with Yahoo Japan Corp., which involved Google's technology for keyword-triggered search advertising services. However, Google later effectively prohibited Yahoo from utilizing this technology for smartphone websites.
For years, the FTC remained unaware of the altered terms of the agreement they had initially approved. Feeling betrayed, the FTC launched an investigation into Google in 2022. This investigation culminated in the FTC's first administrative action against the American search engine giant based on the Anti-Monopoly Law, announced on April 22nd.
As a result of the investigation, Google is now obligated to fulfill the measures outlined in its voluntary corrective action plan concerning its business with Yahoo Japan, which merged with Line Corp. into LY Corp. last year.
The FTC's investigation revealed that after Google's U.S. parent company ceased technological development, Yahoo Japan decided to use Google's advertisement delivery technology in 2010. The proposed partnership raised concerns among industry officials that Google would further solidify its dominance in online advertising.
The FTC, after hearing from both parties, approved the partnership. They concluded that the contract would allow Yahoo to operate freely without constraints from Google. However, the power dynamic between the partners shifted four years later.
In November 2014, Google demanded that Yahoo cease delivering search advertisements to smartphone websites other than its own using Google's technology. Yahoo, reliant on its rival for the core technology, complied. Consequently, Yahoo became unable to deliver such advertisements from September 2015 onwards.
Despite regular communication with Google and Yahoo to monitor the contract's status, the FTC failed to notice the altered terms that favored Google. Sources revealed that even Yahoo did not consult the FTC about the change.
The FTC remained in the dark until they initiated an official investigation in 2022. Upon being contacted by the FTC regarding the impending investigation, Google promptly reverted the contract with Yahoo to its original form.
A former senior FTC official acknowledged that some within the FTC questioned the decision to approve the business partnership in 2010. They admitted that the FTC failed to fully recognize and respond to the evolving digital market at the time.
Following the FTC's announcement of its administrative action against Google on April 22nd, Google stated that they would fulfill their FTC-approved "commitment plan" without fail. Yahoo, on the other hand, declined to comment on the issue.