Yahoo Japan: Google deal gets regulatory green light

A website of Yahoo Japan Corp is seen on a computer screen at a Yahoo! Cafe, a free internet cafe by Yahoo Japan Corp, in Tokyo August 19, 2009.

TOKYO (Reuters) - Japan’s anti-monopoly watchdog gave the official go-ahead on Thursday to a search-engine alliance between Yahoo Japan Corp and Google Inc that had been questioned by competitors.

Yahoo Japan, the nation’s top Internet portal, had said in July that it would adopt Google’s search engine, giving the two firms control of almost all of the domestic search market.

The move had triggered criticism from rivals Microsoft and domestic online retailer Rakuten Inc, citing the risk of unfair competition.

The Fair Trade Commission blessed the alliance on Thursday, but said that it would continue to monitor the progress of the deal for any possible breaches of anti-monopoly laws.

Analysts had expected the deal to go ahead, and Yahoo Japan had said itself in July that it had confirmed with the FTC that the deal would not violate antitrust regulations.

Yahoo Japan’s move came as a surprise as it had been expected to follow Yahoo Inc in choosing Microsoft as a partner.

It said at the time that it had concluded after a thorough investigation that Microsoft’s search technology was not strong enough for its needs, citing Japanese language search capabilities as one example.

Reporting by Reiji Murai; Writing by Isabel Reynolds; Editing by Nathan Layne