Think Tank Worried About Google/Yahoo Deal, Propose Solutions

By Eric Blair
14:35, September 24th 2008
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Think Tank Worried About Google/Yahoo Deal, Propose Solutions

The American Antitrust Institute, a non-profit organization, has analyzed the proposed Google-Yahoo ad deal and found it worrisome in that it could turn out to be a "black hole that swallows up Yahoo.” They have published a 22-page whitepaper (PDF) expounding the reasons for this, and proposing solutions.

The AAI has stated that the Google-Yahoo deal is by default "presumptively anticompetitive", however instead of opposing the deal outright, they have made a series of recommendations that, if followed, they say will actually turn the whole affair into something that in the long run will aid competition instead of hindering it (or instating outright Google monopoly as some of the more stern opponents of the deal fear).

The four main recommendations made by the antitrust institute are as follows:

- Yahoo should be prohibited from running Google ads on third party websites or anywhere else except organic search results in North America.

- Google or Yahoo should not set minimum bid or reserve prices. This is to prevent ad prices from soaring.

- Yahoo’s share of revenue from the Google ads should be constant. This way Yahoo is not paid more if they run more Google ads.

- Yahoo should only use Google ads in their organic searches except where they do not have sufficient inventory of their own to fill the ad space.

The AAI have also expressed their concerns that the deal may nevertheless become uncompetitive, despite declarations of good intent on the companies’ part, declarations which cannot be relied on alone. The antitrust organization has recommended to the department of justice that they issue an injunction to stop the deal from taking place if Google and Yahoo do not take measures to prove their good will and re-assure concerned parties. The two companies are gearing up to go ahead with the deal early next month regardless, and do not believe that there is cause for concern.

Google have stated that "While we disagree with AAI's conclusions, it is noteworthy that even a group that has opposed most deals acknowledges the pro-competitive elements of our agreement with Yahoo. We believe strongly that this deal is good for competition and will benefit advertisers, Web site publishers, and consumers.” Yahoo have made a similar statement, citing their belief that the deal will strengthen their competitive position in online marketing, and will allow them to cater a better experience to advertisers, publishers and users.

The Department of Justice have decided not to file a lawsuit yet, as they have not determined the suit to be illegal, only troubling, but have stated that they may do so if the companies, from whom they are expecting propositions, do not come up with mutually agreeable solutions.



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