WASHINGTON, DC — The proposed deal between Yahoo Inc. and Google Inc. to share advertising revenues could run afoul of U.S. antitrust laws for a variety of reasons, attorneys are saying.Under the proposed cooperative measure, Yahoo’s search engine would run ads sold by Google and reap revenues estimated to be from $250 to $450 million within the first year. According to Yahoo spokespeople, the cash infusion would allow the company to fend off hostile takeovers like the one hinted at by Microsoft Corp. earlier this year.
The U.S. Department of Justice is reviewing the plan to see if it might cause more potential problems than it’s alleged to solve.
Google has more than 60-percent of the global search market, and Yahoo is said to own 16.6-percent. Microsoft already has voiced concern about what the company views as a semi-merger of the No. 1 and No. 2 internet search engines. Now advertisers and antitrust lawyers are weighing in about the matter, too.
Many said they believe the Google-Yahoo deal could make Yahoo less inclined to compete vigorously, since Yahoo would collect revenues whether or not it challenged Google’s dominance in the search-advertising market.
“The Justice Department should have a very healthy skepticism when number one and number two get together for a joint venture and say they’re going to compete,” Evan Stewart of the law firm Zuckerman Spaeder told Reuters.
Lawyers for companies that advertise on one or both search engines said they believe the deal may pass DOJ muster under the current presidential administration, but likely will face additional scrutiny under the next. President George W. Bush and his team have been notoriously pro-big business, but both present candidates — Republican Sen. John McCain and Democratic Sen. Barack Obama — have voiced intent to take tougher, pro-consumer stands.
“You don’t get a lifetime exemption from antitrust laws [just because the issue has] been looked at once,” Stewart told Reuters.
Also of concern to pundits is the potential for the Yahoo-Google deal to establish minimum advertising prices that will be observed by all players in the search-engine-advertising arena. Prices are one of the main areas of competition in any commercial sphere.
Google and Yahoo “find themselves in a situation where the agreement itself may very well be per se illegal,” a source familiar with Microsoft’s position on the deal told Reuters. “That’s a price floor, in antitrust parlance.”
Yahoo and Google, on the other hand, have said their relationship will be limited in scope and application and will not affect competition unduly.
“These are still independent companies who will continue to compete aggressively,” Yahoo attorney Hewitt Pate told Reuters.
Google and Yahoo have agreed to give antitrust authorities 100 days from June 13th in which to consider the proposed deal before it takes effect. The DOJ already has begun studying the matter.
