Google-Yahoo Deal Draws DOJ Probe
After this week's Independence Day celebration in Washington, Google and Yahoo can expect even more fireworks as their proposed advertising deal goes before Congress and the Department of Justice.
The Senate Committee on Commerce, Science & Transportation plans to jump in with a July 9 hearing on the privacy implications of online behavioral advertising that will surely focus on the deal to run Google's search and contextual advertising technology on Yahoo's search engine.
Meanwhile, a newspaper report claims that the DOJ has opened a formal investigation into the advertising arrangement that Yahoo expects to generate between $250 million and $450 million in operating cash flow during the first 12 months of the four-year deal.
Both Yahoo and Google have insisted there are no antitrust implications to the deal since there is no merger between the companies involved. Nevertheless, the nation's two largest search companies agreed to delay the deal for three months to give Washington time to review it.
According to the Washington Post, the DOJ inquiry will not only focus on the Google-Yahoo deal but will also encompass other large Internet companies involved in behavioral advertising.
"There is nothing unexpected in the review of this arrangement as structured by the parties and Department of Justice officials," Yahoo told the newspaper in a statement. But a former head of the DOJ's civil nonmerger division told the Post, "They don't do it without having identified significant issues."
In addition to the Senate Commerce Committee and the DOJ, the deal has also landed on the radar of Sen. Herb Kohl, D-Wisc., chairman of the Senate Antitrust Subcommittee, who has promised hearings of his own.
"We will closely examine the joint venture between Google and Yahoo," Kohl said in a June 12 statement. "This collaboration between two technology giants and direct competitors for Internet advertising and search services raises important competition concerns."
Yahoo CEO Jerry 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, while the Internet. Rep. Joe Barton, the minority leader of the Telecommunications and Internet panel, mailed 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."