Kohl: Google-Yahoo Deal a Possible Antitrust Threat (PC Magazine)
Chloe Albanesius - PC Magazine Thu Oct 2, 12:12 PM ET
Google and Yahoo might be singing the praises of their ad deal on a newly created Web site, but the chairman of a Senate antitrust subcommittee said Thursday that the arrangement could pose a threat to competition.
"We conclude that important competition issues are raised by this transaction," Sen. Herb Kohl of Wisconsin, chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, wrote in a letter to the Justice Department. "Should the amount of advertising outsourced by Yahoo to Google grow significantly, we believe the threat to competition will also increase."
In the aftermath of Microsoft's failed bid for Yahoo, Google and Yahoo in June signed a "non-exclusive" agreement that gives Yahoo access to Google's AdSense for search and content advertising programs in the U.S. and Canada.
A month later, Kohl's subcommittee held a hearing on the agreement, during which Microsoft accused Google and Yahoo of brokering a deal that runs afoul of antitrust laws.
"The information and testimony [from that hearing] that the subcommittee has gathered clearly shows that many advertisers, competitors and industry experts are concerned about Google's potential to control the dominant share of the search advertising market," Kohl wrote Thursday to Thomas Barnett, assistant attorney general.
Kohl acknowledged that his subcommittee is not privy to "the confidential business information supplied by the companies to the [Justice] Department nor the economic models necessary to predict consumer and advertiser behavior."
The subcommittee has thus had to "predict the future of a young and dynamic market," Kohl wrote, and those predictions show a possible threat to competition.
Kohl encouraged the Justice Department to monitor the Google-Yahoo deal, even if the agency signs off on it as not anti-competitive.
"If, over time, you determine that Google is gaining a dominant market position as a result of the Google-Yahoo agreement, then we would encourage the Justice Department to intervene to protect competition," Kohl wrote. "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."
Google and Yahoo deny that their deal with anti-competitive and insist that they will continue to compete with one another for online ad sales.
Google unveiled a Web site late last month that provides information on the arrangement and links to stories favorable news stories about the link-up.
"This agreement - unlike Microsoft's proposed acquisition of Yahoo - means that Yahoo will remain an independent company in the business of search and advertising," Google wrote on the site. "Yahoo has stated that it will reinvest the additional revenue from this agreement into improving its user services and competing vigorously against Google, Microsoft and other companies. This gives all companies the continued incentive to keep improving and innovating."
When Yahoo and Google announced the deal, Yahoo chief executive Jerry Yang brushed off suggestions that a Yahoo-Google would run amok of antitrust regulations, and said that Google and Yahoo would delay implementation of the program for 3.5 months until the Justice Department had an opportunity to review the deal.