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Microsoft Slams Google-Yahoo Japan Deal

Redmond says pact would reduce the number of online advertising platforms in the country to one.

Microsoft said Google's search alliance with Japan, which on Wednesday gained preliminary approval from Japanese authorities, is an anticompetitive arrangement that will hurt online search and advertising customers in the Pacific Rim nation.

"The proposed deal will eliminate search competition in Japan—in paid advertising and natural search results," said Microsoft general counsel Dave Heiner, in a blog post.

Yahoo Japan on Tuesday announced that it agreed to farm out search and advertising on its Web sites to Google. U.S.-based Yahoo Inc., which has a search alliance with Microsoft, holds a 32% stake in Yahoo Japan but does not control the company. Yahoo Japan is majority-owned by Softbank.

Heiner likened Google's deal with Yahoo Japan to its earlier efforts to forge a similar deal with Yahoo Inc., a move that was struck down by U.S. antitrust watchdogs.

"History seems to be repeating itself, now on the other side of the Pacific. The two main search advertising platforms in Japan are run by Google and Yahoo Japan," Heiner wrote in his blog post. "Google plans to replace Yahoo Japan's search advertising platform with its own, reducing the number of ad platforms in Japan to just one," Heiner said.

"The proposed deal will eliminate search competition in Japan—in paid advertising and natural search results," Heiner added. Google controls 51% of the Japanese search market, while Yahoo Japan holds a 47% stake. Microsoft's complaints appear to be falling on deaf ears.

Japanese antitrust authorities on Wednesday appeared to OK the deal because Google and Yahoo Japan will continue to operate as independent entities.

"Based on those conditions, the partnership wouldn't immediately cause any problems related to antitrust regulations," said Takahide Matsuyama, secretary-general of Japan's Fair Trade Commission, at a news conference. Still, Matsuyama said Japan's FTC would continue to monitor the arrangement, according to The Wall Street Journal.

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