Senator Wants Google Yahoo Deal To Be Monitored

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Senator Wants Google-Yahoo Deal To Be Monitored

By: Mike Sachoff
2008-10-03

US Senator Herb Kohl (D-WI), Chairman of the Antitrust Subcommittee, is urging the US Department of Justice to closely look at the Google-Yahoo advertising agreement and to continue monitoring the competitiveness within the industry.

Under the terms of the Google-Yahoo agreement, Google will provide a portion of the advertising displayed when the Yahoo search engine is used. The two companies will split the proceeds. The amount of advertising outsourced will remain entirely at Yahoo's discretion.

Yahoo estimates that it will generate between $250 to $800 million a year in additional revenue from the agreement. Yahoo says it will use the money to restructure and improve it search business in an effort to attract more users and increase search advertising sales.

In a letter sent to Assistant Attorney General Thomas Barnett at the Department of Justice's Antitrust Division Senator Kohl wrote," This contemplated agreement, between the two largest platforms for search advertising, presents a number of antitrust questions which require an examination."

"These issues include: whether this agreement will lead to higher advertising prices; whether search and display advertising are interchangeable and substitutable; and whether this transaction will strengthen Yahoo as a competitor or perpetuate its decline and even exit from this market; and whether there are significant barriers to entry impeding new competitors in this market."

Kohl said Yahoo will have less incentive to compete against Google because it will rely on its main competitor for a significant increase in revenue. Yahoo says it will continue to operate its own search engine business, and that its advertising agreement with Google will allow it to become a stronger competitor in the marketplace over time.

Kohl says that if it is determine that Google is gaining a dominant market position as a result of the Google -Yahoo agreement then the Justice Department should intervene to protect competition.

"Even should you conclude at present that this deal is not contrary to antitrust law, the Department must be sure that this deal never in the future crosses the line into an unacceptable, anti-competitive collaboration among competitors which will harm consumers and advertisers," wrote Kohl.

About the Author:
Mike is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.


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