Antitrust Lawyer Hired To Challenge The Google-Yahoo Deal In Court?

By Dee Chisamera
14:30, September 10th 2008
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Antitrust Lawyer Hired To Challenge The Google-Yahoo Deal In Court?

Amid concerns that the Google-Yahoo deal would create inequities on the search advertising market, the Justice Department is reportedly ready to challenge the partnership. The situation is currently under review by California Attorney General Jerry Brown’s office, but a new addition to the review, that of antitrust lawyer Sanford Litvack, indicates that the two search engines may not receive the much needed blessings.

Attorney General Jerry Brown refused to comment on Litvack’s role in the situation. However, analysts believe that Litvack’s presence is a clear sign that the Google-Yahoo matter will soon hit the court. Sanford Litvack, who is among the best known litigation lawyers in the United States, is the former Walt Disney vice chairman and Assistant Attorney General in charge of the Antitrust Division of the U.S. Department of Justice during the Carter administration.

Despite the high discretion of Brown’s office on Litvack, which makes most people think we are heading toward a court matter, some analysts believe that Litvack's role, for now, is merely to make an idea of the situation, and perhaps decide whether the matter should go to court or not.

According to the San Francisco Chronicle, Yahoo was aware of Litvack’s naming as a consultant in the review, however, Tracy Schmaler, Yahoo Director of Global Public Affairs, said they were told “to read nothing into that fact.”

Earlier this week, the Association of National Advertisers (ANA) sent a letter to the U.S. Department of Justice, expressing disapproval of the Google-Yahoo partnership, which would “diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising.”

Following Google’s testing of its AdSense for Search service on Yahoo pages earlier this year, speculations that Yahoo was preparing to outsource its search advertising to Google began also began to appear. In June this year, the two companies confirmed reaching an agreement to sell advertising together, in a move that is expected to bring Yahoo $250 to $450 million in incremental operation cash flow.

However, before proceeding with the deal, the two companies agreed to a three-month investigation period, allowing the Antitrust Committee to analyze the partnership before enacting it. In the meantime, lawmakers and marketers expressed concern that the deal would not only monopolize the market, but it would also give the two search giants an unwanted advantage over user information.

Despite that, the two companies might argue that the deal is not an exclusive one, according to a provision of the agreement that allows other companies to display ads on Yahoo pages as well. The question on everyone’s lips right now is: will Google and Yahoo manage to convince lawmakers that the deal would not create inequities, if the matter will indeed reach court? That still remains to be seen.



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