Kohl (Amazingly) Doesn't Want to Smash the Google-Yahoo Deal

By Clint Boulton  |  Posted 2008-10-03 Print this article Print

Sometimes in this business, when you read enough opinions, offhand comments or outright vitriol, you can get caught jumping the gun and drawing ill-conceived, intemperate conclusions just from a headline or two.

Take, for example, this headline: "Kohl Weighs in With Justice Department Over Google-Yahoo Agreement," which tops a letter sent from Herb Kohl, (D-WI) and chairman of the Senate's Antitrust Committee, to Assistant Attorney General Thomas Barnett at the Department of Justice's Antitrust Division.

Having read a lot of naïve comments about the high-tech market from politicians over the years, from the Microsoft-DOJ tussles, to the Oracle-PeopleSoft case, and now this pending pact between Google and Yahoo, I've become convinced politicians are out of their depth talking tech economy.

I was ashamedly programmed to think that Kohl's letter would be a guided missile aimed at blowing up the Google-Yahoo deal, which would really annoy me. I don't think either Kohl, his staff or anyone else in government grasps Web search advertising, or other ways of making money from the Internet that aren't e-commerce driven.

After reading it, I'm pleased with Kohl's stance. He is urging Bartlett to "closely examine" the deal, which will enable Google paid search terms to run alongside Yahoo results where it makes sense from a financial perspective.

Kohl isn't begging the DOJ to crush the deal the way Microsoft has, and it reads as though Kohl, unlike other parties, isn't being unduly influenced by Microsoft's arguments. That's a credit to the independent nature of his committee.

Kohl spends the bulk of his letter outlining what Google and Yahoo already have ad nauseum in public forums and on special Web sites. The interesting meat is this:

While we have conducted a careful review of this transaction, we do not have the benefit of the confidential business information supplied by the companies to the Department nor the economic models necessary to predict consumer and advertiser behavior. Determining the competitive effects of this transaction, moreover, requires us to predict the future of a young and dynamic market. Nonetheless, we conclude that important competition issues are raised by this transaction. Should the amount of advertising outsourced by Yahoo to Google grow significantly, we believe the threat to competition will also increase.

Essentially, Kohl is saying he and his staff lack the information to oppose the deal outright, so he's asking the DOJ to act as it will so long as it monitors the deal. I appreciate that. Kohl isn't buying into the negative spin from Microsoft and others; he's making what seems to be an honest, practical assessment.

Kohl also asks Bartlett to monitor the Internet landscape for other deals that can impact competition, and asked the DOJ to make sure the Google-Yahoo deal doesn't cross antitrust law.

I don't care if the Google-Yahoo deal passes muster, but I don't oppose it. As I've said, Google has won the search ad war and Microsoft has no shot at displacing it.

Allowing this deal to go through shouldn't make much difference in the space as long as Google continues to respect its auction boundaries for AdSense. Somebody prove to me how this would hurt the consumer, which is a prime condition for an antitrust claim. I'll listen.
But as much as I'm miffed by deal detractors heeding Microsoft's rhetoric, I'm equally annoyed by some of the apparently uninformed proponents of the deal, including, well, the Democrats in California, who make weak pleas in this letter.

The deal is significant enough for Google, Yahoo, advertisers and publishers. Regardless of what parties may feel about the deal, we don't need more factions who don't grasp the space weighing in on it.

Kudos to Kohl: Instead of buying into the monopoly rhetoric, he's deferring to the DOJ.

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