Yahoo CEO Jerry Yang made an obligatory round of Capitol Hill this week, assuring lawmakers there are no antitrust flies on Yahoo's advertising deal with Google. While the arrangement does not require government approval, both Yahoo and Google are working Congress hard to allay concerns about consumer privacy and competition in the Internet advertising industry.
Google and Yahoo announced June 12 they had reached a nonexclusive deal to run Google's search and contextual advertising technology through its AdSense for Search and AdSense for Content advertising programs on the Yahoo search engine. Yahoo expects to generate between $250 million and $450 million in operating cash flow during the first 12 months of the four-year deal.
The arrangement raised the immediate concern of antitrust lawmakers in Congress. U.S. Sen. Herb Kohl, D-Wisc., chairman of the Senate Antitrust Subcommittee, said his panel would be scrutinizing the deal. The House is also planning hearings for later this summer about the deal.
Yang met with Kohl June 18 to discuss the deal. He also met with U.S. Rep. Ed Markey, chairman of the House Subcommittee on Telecommunications and the Internet.
"We structured the agreement with Google so that Yahoo will not transfer any personally identifiable information to Google without user consent," Yahoo spokesman Tracy Schmaler said in an e-mail response about Yang's visit. "We have also designed this agreement so that both companies have stayed within each of their existing privacy and data policies, such as Yahoo's policy regarding logs anonymization after 13 months."
While Yang met with Democratic leaders, U.S. Rep. Joe Barton, the minority leader of the Telecommunications and Internet panel, prepared Yang's homework assignment, mailing Yang a list of eight questions about the deal.
"Given the consolidation within the online advertising industry, and with three companies dominating the U.S. online search market, I am concerned about how this collaboration will impact competition within the online search advertising industry," Barton wrote. "I am also concerned about how the relationship between Google and Yahoo will affect the collection, storage and use of data relating to an individual's online activity."
Barton said that while collaborations may be "benign and even, in some instances, precompetitive," they might still be anti-competitive.
"They may limit independent decision-making, reduce the incentive or ability for a company to innovate or compete, facilitate collusive activity through strategic information and data sharing, or discourage a company from entering the market based on a perception that competitors in the market are collaborating in an anti-competitive manner," Barton wrote.
Both Yahoo and Google agreed to delay the implementation of the deal for 90 days to give the Department of Justice time to peruse the arrangement.