Yahoo and Google- Getting Friendly
Yahoo and Google are having a hard time getting approval from the Department of Justice for their non-exclusive advertising agreement. The agreement, which both companies claim will not only serve the public interest but will result in healthy competition, was not well-received by all. Basically, the agreement is meant to allow Google pay-per-click ads to appear on Yahoo, and help consumers to find the most relevant search options. The companies have posted a “Yahoo/Google Facts” informational site about the sponsored search ad liaison in an effort to make it clear that this agreement is neither a merger nor a way for one company to gain an equity stake in the other.
The thing that irks me most about the whole situation is not that Google and Yahoo want to make it easier for advertisers to do their job, but that the government is intervening in something (yet again) even though the pair are neither merging nor trying to fix prices. The Chairman of the Subcomittee on AntiTrust, Herb Kohl, claims that since Google and Yahoo combined already control 90% of the search market the deal would “reduce Yahoo to nothing more than the latest satellite in Google’s orbit”, and Microsoft is not too happy about the agreement either. In the end, however, the deal is likely to go through and advertisers will still be the ones who set prices by bidding in real time auctions.
There are some interesting quotes from the informational site, so take a look….
Michael Learmonth, Silicon Alley Insider
“We don’t see how the deal could possibly warrant government intervention…but that doesn’t mean Microsoft’s legal army won’t be able to slow it down or scuttle it.” (Silicon Alley Insider, 6/13/08)
Ed Black, Computer & Communications Industry Association (CCIA)
“Antitrust regulators look at the impact on competition and consumers. This is not a merger. It does not seem that either competition or consumers are harmed by a non‐exclusive business deal, which does not eliminate Yahoo from any of the marketplaces it is active in. With no dimunition of Yahoo’s competitive ability, we don’t see where competition gets harmed and we don’t see where consumers get harmed.“ (CCIA Press Statement 6/13/08)
Henry Blodget, Silicon Alley Insider
“[This is a] perfectly defensible deal structure that the regulators shouldn’t have any real cause to block.”
“…Yahoo can now focus almost all of its efforts on revitalizing its properties and display business, which is where its future lies.” (Silicon Alley Insider, 6/12/08)
Henry Blodget and Dan Frommer, Silicon Alley Insider
“But if this test merely leads to a partnership in which Yahoo runs AdSense on its pages, it’s hard to see why anti‐trust folks would prevent such a deal…This isn’t like previous anti‐trust examples, where, say, Microsoft pointed a gun at Dell’s head and said ‘take IE or you don’t get Windows.’” (Silicon Alley Insider, 4/9/08)
James B. Stewart, Columnist, Wall Street Journal / Smart Money
“Naturally, the antitrust police are already on the prowl, and you can expect Microsoft to be egging them on. But Yahoo and Google shouldn’t be deterred. They will still compete vigorously for display advertising and in other areas. It isn’t like they are merging. There is nothing in antitrust law that says a company has to pour money into an enterprise just to maintain the appearance of competition when someone else can do it more profitably and efficiently.”
Wall Street Journal, 5/7/08
…What do you think about the agreement?
