Rakuten Asks Japan FTC to Probe Yahoo Japan-Google Deal

Internet shopping mall operator Rakuten has asked Japan's Fair Trade Commission to examine an Internet search deal between Yahoo Japan and Google, it said Wednesday.

The deal, which was announced in July, will see Yahoo Japan rely on Google's search engine for results presented on its home page and is scheduled to go into effect before the end of this year.

Rakuten said it is asking the Japan Fair Trade Commission to investigate the deal on the grounds it may stifle competition and impede growth in the Japanese Internet market.

The deal stands to greatly strengthen Google's position in the Japanese market. Yahoo Japan is the most visited Web site in Japan and Google ranks second in search. Taken together the deal would mean Google's search engine is responsible for handling about 90 percent of domestic searches in Japan.

The deal has already been criticized by Microsoft, which has called it "anticompetitive."

Microsoft signed a similar deal with Yahoo in 2009 to provide search results for its U.S. site and subsidiaries around the world, but Yahoo Japan is exempt from the deal because Yahoo doesn't hold a majority stake in the company. Softbank, an early investor in Yahoo, holds the largest stake in Yahoo Japan with the U.S. company owning just under 34 percent.

Yahoo Japan has defended the deal and says it's only using Google for the backend search service. Other items on its results page, including advertising, will continue to be supplied from within the company.

While little known overseas, Rakuten is one of the giants of the Japanese Internet and claims 64 million registered members for its sites -- equivalent to roughly half the entire population of Japan.

The company's core business is the Rakuten Mall shopping site. It offers over 50 million items of merchandise from 33,000 retailers, according to Rakuten, and operates under the banner "Shopping is Entertainment."

Yahoo Japan shares were trading down almost 3 percent on the news in Wednesday afternoon trading. The broader Tokyo market was down almost 2 percent.

Martyn Williams covers Japan and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

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