WASHINGTON, DC — Never let it be said the U.S. Congress would stand by idly while Rome burned.Instead, congresscritters probably would add gasoline to the conflagration.
The proposed Google search-advertising partnership with Yahoo already is under scrutiny by the U.S. Justice Department and the Federal Trade Commission. On Tuesday, Congress turned up the heat by hosting separate Senate and House hearings about the matter.
During the hearings, lawmakers grilled representatives of the No. 1 and No. 2 search engines — along with representatives from Microsoft, whose search engine ranks third internationally — about how the proposed deals might affect advertisers and consumers.
Sen. Herb Kohl (D-WI), chairman of the Senate Judiciary subcommittee on antitrust, voiced concern the deal could reduce Yahoo to a satellite in Google’s orbit.
Under the terms of the proposed deal, Yahoo would run advertising provided by Google with some of its search results in the U.S. and Canada. Microsoft, which in May saw rebuffed its offer to buy Yahoo, is opposed to the deal, as are some consumer watchdog groups. Detractors say the deal could stifle competition in the lucrative online advertising space.
Calling Google’s ad technology superior to that used by Yahoo, the two companies said the deal actually would benefit consumers by presenting them with more relevant advertising. In addition, and somewhat counter-intuitively, Yahoo General Counsel Michael J. Callahan said Yahoo plans to use the expanded revenues provided by the deal — which some estimate could reach $800 million annually — to compete more vigorously with Google.
Sen. Orrin G. Hatch (R-UT), the ranking member of the Senate Judiciary subcommittee on antitrust, didn’t buy Callahan’s argument.
“Doesn’t this give advertisers incentive to bypass Yahoo entirely and go directly to Google?” he asked. “Why bother bidding on Yahoo’s site when I can go to Google and get two for one?”
