Consumer Advocates Exhort DOJ, FTC to Scrutinize Microsoft-Yahoo Deal

The Center for Digital Democracy and Consumer Watchdog urge the Department of Justice and Federal Trade Commission to look closely to make sure the proposed Microsoft-Yahoo search deal does not violate antitrust laws or citizens' privacy rights. Fearing too much meddling from antitrust regulators, the Competitive Enterprise Institute calls for the DOJ and FTC to bless the deal. One reader argues that Yahoo shareholders will turn tail and run from Microsoft.

If Microsoft and Yahoo are to consummate their search and search ad agreement by early 2010 to start chipping away at market leader Google's 65 percent market share, they are going to have to run through quite the gauntlet of opposition.

Google hasn't said much about the July 29 agreement beyond the fact that it is interested in learning more about the deal, which gives Microsoft's Bing search engine the right to power Yahoo's search for a decade. Yahoo expects to collect money on the search ad sales.

Still, experts expect Google to at the least whisper horrible things about the pact in the ears of antitrust regulators such as the Department of Justice and Federal Trade Commission.

Consumer advocates are being much more vocal about the pact because Microsoft's Bing and Yahoo's search engine process a lot of user data. Organizations want to make sure any consumer data shared between the two companies is closely protected.

The non-profit Center for Digital Democracy said it will ask regulators in both the United States and EU to closely examine the proposed data collection, privacy and online ad-related business practices of the deal.

Jeffrey Chester, executive director for the CDD, told eWEEK that while the partnership should bring some much needed competition for Google, he said "the further consolidation of the global digital advertising system should be a concern to Internet users, privacy advocates, online marketers and competition regulators."

"Regulators will have to demonstrate to both consumers and search advertisers that they will actually benefit from this proposed deal: Will it really reduce the cost of search ads, bring tangible financial gains to consumers and truly protect our privacy?" Chester said.

Chester also wondered if the deal isn't the first step in the latest attempt by Microsoft to assimilate Yahoo in its entirety, something the software giant failed at in February 2008, when Microsoft tried to acquire Yahoo for $44.6 billion.

"We are concerned that this agreement is merely an initial step in what will eventually be the complete integration of Microsoft and Yahoo, including mobile, display, ad exchanges, research and development, etc.," Chester said. "Both Microsoft and Yahoo understand that to compete in today's online advertising marketplace, search and display marketing-including data collection, analysis and targeting-must be closely linked."