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Japan’s FTC interim report finds 60% concerned about Google ad contracts

  • April 29, 2020
  • , The Japan News , 2:37 p.m.
  • English Press

The Fair Trade Commission has released an interim report on its investigation into the online advertising market.


According to the report released Tuesday, 60% of respondents believe there are “problems or issues” with the advertising contracts offered by the American IT giant Google LLC.


In addition, 60% of ordinary users expressed “concerns” about the collection and use of information by IT companies.


The investigation focused on the contracts and services offered by domestic internet service giants Yahoo Japan Corp. and LINE Corp., as well as Google, Facebook Inc. and Twitter Inc.


The survey found businesses that buy digital advertising from these five companies most frequently cited Google with regard to “problems or issues” with contracts, with 75% of advertising brokers and 65% of website operators that post ads giving this response.


Many respondents said the contracts are uniform and cannot be changed to suit their desires. About half of respondents cited problems with Yahoo’s contracts.


Based on these findings, the commission said these companies may be guilty of “abusing their superior positions” over advertisers, such as by making unilateral changes to contracts and excluding competitors, and regarding transactions such as advertising fees, and in areas including transparency.


Individual internet users also expressed concern about data collection by the tech giants. The commission said it would “work toward clarifying the conditions of use.”


Of the 2,000 people who responded about using search services, 1,042 expressed “concerns” about the collection and use of data by large IT companies, while about 60% said they would continue to use the services out of convenience.


More than 80% of respondents said they use the communication app LINE, while just over half said they use YouTube and Twitter. Facebook and Instagram were cited by close to 40%, showing the concentration of certain services.


The commission said it “needed to clarify” whether the use of data by large companies represented an “abuse of their superior status,” which would violate the antimonopoly law by using their stronger position to impose unfavorable conditions on individuals.


Digital advertising has grown along with the internet. In 2019 it accounted for 30% of the roughly ¥7 trillion domestic advertising market.


There has been particular growth in advertisements linked to online browsing history, which has increased the influence of the large tech companies that provide search and social media services.


The survey was conducted on businesses in February and March, and on regular users in late February. Overall 317 companies and 4,000 individuals responded.


Going forward, the commission plans to determine which instances involving large tech companies violate the antitrust law, and to promote the creation of rules that ensure transparency in transactions.

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