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Japan -- Powered by Google

Japan effectively has outsourced the organization, storage and access to its nation's information, culture, history, and online commerce to one entity, Google, in consenting to a national monopoly search engine/ad platform for Japan going forward.  

  • Unlike Japan's neighbors, China, Korea, and Russia, Japan apparently has chosen to not promote an indigenous Japanese search engine/advertising platform, or to ensure search competition -- a fateful tacit decision that heralds that Japan will more likely become a de facto third world online economy long term.   

Apparently Japan's Fair Trade Commission or Government have not thought through all the huge ramifications of putting all their information eggs-in-one-basket from a competition, cultural, political, economic, privacy, or national security perspective.

  • Obviously Japan's Government did not think through the national security implications of Google's password system code being stolen by Chinese hackers last fall (per the New York Times), or Google partnering with the NSA (per the Washington Post.) 
  • Obviously Japan's authorities did not think through how unresponsive and unaccountable an unregulated search engine/ad platform monopoly will be for Japanese consumers, advertisers or publishers.  
    • What is interesting and unspoken here is what Japan and Google will do when Google increasingly favors its own free information, products and services over competitive Japanese information, products and services in the monopoly search rankings that Japan apparently has approved. 
    • The logical extension of this decision could be that search neutrality oversight/regulation is now much more likely to occur in Japan in the future given that Japan's antitrust authorities do not understand how Japan has unilaterally surrendered its online information economy and culture effectively to Google. 
      • Japan may need to consider opening a new Japanese consulate in Mountain View and potentially appoint an Ambassador to represent Japan before the increasingly sovereign virtual state of Google -- and the self-described "biggest Kingmaker on this earth."
      • A Japan -- Powered by Google increasingly will need to stay in the good graces of Google.

To put the Yahoo-Japan/Google outsourcing deal in a broader perspective for alert and vigilant U.S. and EU antitrust authorities, since Yahoo-Japan now handles about 4% of searches worldwide, this contract would extend in one deal, Google's monopoly from ~70% of all searches worldwide to ~74% of all searches worldwide per Comscore data.

In sum, Japanese antitrust authorities got played. They listened only to the two entities that would benefit from effectively colluding to corner the Japanese search/ad platform market functions. 

  • The line outside the Japan FTC this morning should be long with smiling aspiring monopolists, eager to get a piece of this Japanese collusion-is-good precedent for themselves.   

    When antitrust problems arise from this agreement -- and they certainly will because all the structural incentives at bottom are for Yahoo-Japan and Google to optimize their overall returns by tacitly divying up the Japanese online market among themselves -- Japan will have to clean up the mess it has made from not enforcing fair competition law and unfortunately regulate to protect consumers and digital information competition long term.

    To the extent it is true that "information is power," and "power corrupts and absolute power corrupts absolutely," an online Japan -- powered by Google, is a predictable disaster waiting to happen.