U.S. DoJ Exploring Whether Google and Yahoo! Deal Is Anti-Competitive; Deal On Hold For Now

Posted Oct 7, 2008

After the Microsoft Corporation (NASDAQ:MSFT) acquisition bid for Yahoo! Inc. (NASDAQ:YHOO) fell through, Google Inc. (NASDAQ:GOOG) made an advertising deal.  The deal was that Google would act as a Yahoo!’s broker for advertising inventory.  This way both Yahoo! wouldn’t have a shortage of ads and Google would make a good amount of money from it.  There have been many complaints about this deal as Yahoo! and Google are the #1 and #2 websites in the world according to Alexa. 

The Association of National Advertisers, Inc. sent a letter to the United States Department of Justice citing that the Google and Yahoo! partnership would control 90% of search advertising inventory.  The ANA claimed that this would lead to diminished competition, limit choices, and increase concentration of market power.

Google responded by creating a website with a presentation about why this does not cause any of the aforementioned circumstances.

The Justice Department and government officials in Canada and Europe are exploring whether the deal is anti-competitive.  Although both companies are ready to move ahead with the deal, they have decided to pause just in case there is any further interruption.  Why start arranging the ads if it gets ruled to be unlawful later?

The investigation is expected to conclude towards the end of the month.