Antitrust body: Don't push Yahoo into Microsoft's arms

 

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Posted on 24 Sep 2008 at 08:15

The US Department of Justice should wave through Google and Yahoo's ad-sharing deal to prevent Yahoo from being gobbled up by Microsoft, according to the American Antitrust Institute.

Because the search advertising market is already dominated by Google, the institute argues that consumers would be best served if number two player Yahoo remained independent.

Google's market share of US web search widened to 63% in August, while Yahoo dropped to 19.6% and Microsoft slipped to 8.3%, according to comScore.

"Prohibiting Yahoo from using Google ads could result in Yahoo's acquisition by Microsoft, which would effectively remove Yahoo from the market," writes Norman Hawker, who teaches at Western Michigan University and is a fellow at the AAI, a nonprofit think-tank that studies antitrust issues.

At the Justice Department, Thomas Barnett, the assistant attorney general for antitrust, declined to discuss the Government's assessment of the deal. "We are obviously looking at the issues and trying to work through them," he says.

In June, Google and Yahoo announced a deal that would allow Yahoo to place some Google ads on its search results. The arrangement has been widely seen as a effort to help Yahoo fend off Microsoft by helping it earn another $800 million (£431 million) annually.

Advertisers have worried that the deal will mean they will have to dig deeper to buy ads, and Hawker urges the Justice Department to consider their concerns.

He wants the department to consider barring Yahoo from using Google ads to replace less lucrative Yahoo ads, barring Google and Yahoo from setting minimum prices on its advertising auctions, and preventing Yahoo from using Google ads on free or "organic" search results outside North America or on any third-party web site.

Author: Barry Collins and Reuters