The Only Yard For The Internet Junkie

Microsoft attacks Google-Yahoo deal

July 19th, 2008 |

Article Source: The Only Yard For The Internet Junkie

The search advertising deal between Google and Yahoo should be blocked, Microsoft has told a US congressional committee, saying the advertising industry has never seen one company dominate 90% of a market.
Brad Smith, Microsoft’s senior vice-president and general counsel, yesterday told the Senate committee that Yahoo’s chief executive, Jerry Yang, had even warned the technology giant that such a deal would freeze it out of the market.

“Never before in the history of advertising has one company been in a position to control prices on up to 90% of advertising in a single medium,” Smith said, appearing before the Senate judiciary subcommittee on antitrust, competition policy and consumer rights.

“Not in television, not in radio, not in publishing. It should not happen on the internet,” he added.

Microsoft was backed up by other executives from Yahoo and Google’s search advertising rivals, including Matt Crowley, the chief marketing officer of YellowPages.com.

“[If Yahoo] does anything but continue to compete all-out to best Google, there is a real risk that the market will tip even further toward Google,” said Crowley. “No one in the industry wants that to happen.”

Members of the committee, which was set up to explore how the deal will affect the future of online advertising, also questioned executives on whether the collaboration would strengthen Google’s dominance of the market and be even more anti-competitive than the aborted Microsoft takeover of Yahoo.

“[Congress needs to explore] whether this agreement will reduce Yahoo to nothing more than the newest satellite in the Google orbit,” said Herb Kohl, the chairman of the committee.

Google’s chief legal officer, David Drummond, defended the deal, saying consumers and advertisers would benefit.

“The whole system becomes more efficient: people see and click on more ads that are useful to them … and advertisers get more potentially interested customers,” Drummond said.

Yahoo’s general counsel, Michael Callahan, added that Yahoo would become “an even stronger competitor to Google, to Microsoft and to others” because the deal would strengthen its revenues.

The deal, struck between the two firms last month, will increase Yahoo’s cash flow by $200m to $450m (£224m) in the first year alone, according to the firm. Source: Guardian