Google's Deception and the FTC's Investigation
The Japan Fair Trade Commission (FTC) discovered that Google LLC had misled them regarding a business agreement with Yahoo Japan Corp. This revelation came to light several years after the FTC had approved the partnership, which involved Google's technology for keyword-triggered search advertising services.
The FTC's approval was based on the understanding that Yahoo would have unfettered access to Google's technology. However, Google later imposed restrictions, effectively barring Yahoo from using the technology for smartphone websites.
For years, the FTC remained unaware of this alteration to the agreement. This lack of transparency led the FTC to feel betrayed and prompted them to launch an investigation into Google in 2022. This investigation culminated in the FTC's first administrative action against Google based on the Anti-Monopoly Law, announced on April 22nd.
As a result of the investigation, Google is now obligated to comply with the measures outlined in its voluntary corrective action plan concerning its business dealings with Yahoo Japan, which merged with Line Corp. to form LY Corp. in 2021.
The initial agreement between Google and Yahoo in 2010 stemmed from Yahoo Japan's decision to utilize Google's advertisement delivery technology after its U.S. parent company ceased technological development. This partnership raised concerns within the industry about Google further solidifying its dominance in online advertising.
Despite these concerns, the FTC approved the partnership after concluding that the contract would allow Yahoo to operate independently without restrictions from Google. However, the power dynamic 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 Google for the core technology, complied. This resulted in Yahoo's inability to deliver such advertisements from September 2015 onwards.
The FTC, through regular communication with both companies, failed to notice the alteration of the agreement in Google's favor. Even Yahoo did not inform the FTC about the change. This lack of transparency left the FTC in the dark until they initiated their official investigation in 2022.
Upon being contacted by the FTC regarding the impending investigation, Google promptly restored the original terms of the contract with Yahoo.
This incident highlights the importance of transparency and accountability in business dealings, particularly when dealing with large corporations like Google. The FTC's investigation serves as a reminder that companies must adhere to agreements and avoid misleading regulatory bodies.