Japan's trade watchdog plans to instruct Google LLC to reform its business practices after finding that it may have imposed unfair restrictions in its search advertising agreement with Yahoo Japan, sources close to the case said Tuesday.

The Japan Fair Trade Commission believes the practices by the U.S. search giant could further undermine competition in the advertising market, the sources said. Yahoo Japan, now LY Corp., has said it had no choice but to accept Google's request because it receives ad distribution technology from Google.

File photo taken in May 2019 shows the Google LLC logo at the company's headquarters in Mountain View, California. (Kyodo) 

Google has submitted to the trade commission a plan to voluntarily improve its practices, according to the sources. If the commission approves the plan, the company will be exempted from facing fines or other punitive measures imposed under the antimonopoly law.

The two firms entered a tie-up in around 2010 enabling Yahoo to use Google's search advertising technology, which displays online ads linked to searched keywords.

But Google later demanded that Yahoo stop providing search-linked advertising to the portal sites of its business partners, according to the sources.

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