Google, Yahoo Deal with DOJ as Microsoft Lobbies to Stop Them

By Clint Boulton  |  Posted 2008-10-14 Print this article Print

It looks like civil heads are prevailing among the parties involved in the search ad deal between  Google and Yahoo.

The Wall Street Journal today said Google and Yahoo are hashing out concessions that will make it easier for the U.S. Justice Department to allow the deal to pass muster. 

This comes after Google said the deal, in which Yahoo would run Google keywords alongside its search results, would go forward in early October and then postponed the implementation to negotiate with the DOJ.  

According to the WSJ, stipulations would include capping the volume of Google ads Yahoo would use, assurances that Yahoo would continue to compete in search ads, and a reporting mechanism to ensure compliance.

Ideally, such moves would help ensure prices advertisers pay for ads on Google or Yahoo don't rise significantly after the deal. Really, if Google and Yahoo seriously want to go forward with this agreement, they have no choice but to play ball with the DOJ and try to get the ad cap up as high as possible.

If Google balks, it indicates the company was more interested in asserting greater dominance over the search ad domain. Yahoo won't balk, though if you listen to others it is still mortgaging its future for quick cash. I'd argue that Yahoo didn't have much of a future in search ads anyway. Stick to display and attack mobile ads, Yahoo.

No doubt the concessions are what Sen. Herb Kohl had in mind when he sent a letter to the DOJ earlier this month asking the group to carefully consider the Googlehoo deal and its broader impact on the online ad space.

The DOJ also clearly listened to opposition from concerned parties, such as Microsoft and the Association of National Advertisers, which have complained that the search ad deal would put too much control of the search ad market in Google's hands while ultimately destroying Yahoo.

In fact, Google's PR in Washington today is shopping a story from Roll Call about Microsoft secretly calling out favors and good will from Capitol Hill to thwart Googlehoo. Roll Call's Kate Ackley wrote:

"While Microsoft says it is only concerned with keeping a competitive marketplace in the online advertising scene, others see this fight as little more than an opportunity for Microsoft to exercise its considerable political clout against Google, a company it sees as an ever-increasing rival."
I agree. I'm not sold Microsoft is chiefly concerned about search advertising or Yahoo, but in keeping Google from getting more powerful. Indeed, that's the focus of any company these days trying to make a living in the online space.

Google's hooks in the Internet start at search but run so far and deep thanks to YouTube, SAAS apps and other services that just about anyone trying to make a buck online must go through Google, the Web's Borg.

Can Microsoft wield its political clout to staunch Google's tide? If not, then who? Must Google experience a colossal failure to be considered invulnerable? |

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