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.