The chairman of the United States Senate antitrust subcommittee, Wisconsin Senator Herb Kohl, has urged  the Justice Department to continue scrutinizing possible antitrust ramifications stemming from the proposed search advertising partnership between Yahoo and Google even if it receives eventual approval. Kohl and the other panel members asked for the open-ended investigation into the partnership, scheduled to take effect this month, in a Thursday letter to assistant attorney general Thomas Barnett. Even If Agreement Is Approved, Kohl Urges Caution The call was the first for ongoing monitoring even if the Yahoo-Google deal received approval. "Even should you conclude at present that this deal is not contrary to antitrust law, the Department must be sure that this deal never in the future crosses the line into an unacceptable, anti-competitive collaboration among competitors which will harm consumers and advertisers," Kohl wrote in the letter. The proposed agreement, which could extend as long as a decade should all optional renewals take place, would allow leading search engine firm Google to provide ads alongside search results from the second most popular search engine firm Yahoo, as well as on some of its United States and Canada Web properties. The nonexclusive search advertising deal would place ads from Yahoo and Google into online auctions that other firms would be open to take part in - a measure put in place to try to help gain the approval of both U.S. and European Union antitrust regulators. The Kohl-led antitrust subcommittee warned the Department of Justice it had found that "important competition issues are raised by this transaction," according to the Thursday letter. Kohl added that "should the amount of advertising outsourced by Yahoo to Google grow significantly, we believe the threat to competition will also increase." Facing Opposition From Microsoft, Yahoo And Google Tout Ad Auction System Microsoft has led the opposition to a Yahoo tie-up with Google, maintaining that such a digital advertising powerhouse would wield an inordinate 90 percent share of the market. "Any definitive agreement between  Yahoo and Google would consolidate over 90 percent of the search advertising market in Google’s hands," Microsoft general counsel Brad Smith noted in an April statement. "This would make the market far less competitive," Smith added. Earlier this week Yahoo president Susan Decker said the Sunnyvale, California-based Web pioneer would use an auction system to avoid setting search term pricing. "Let me be absolutely clear that we are not in any way going to be coordinating or setting search term pricing with Google," Decker said Friday. Maintaining that Yahoo by itself is not able to "provide relevant paid search ads for every search," Decker looked to make the case for a Google deal she which said offered "marvelous potential [to] the marketplace." "The fact is that advertisers set prices by bidding in our real time auctions," added Decker, who assumed a larger role at Yahoo amidst a June reorganization that sought to stabilize the company after struggling with Microsoft's attempted takeover. More Advertising Groups Speak Out About Search Advertising Tie Up Kohl asked the Justice Department to "continue to monitor the state of competition in this industry," including examining "whether this transaction will strengthen Yahoo as a competitor or perpetuate its decline and even exit from this market." The Justice Department has not yet responded to the Thursday letter, and continued to review the proposed partnership, which also faced review from attorneys general in eleven states, European Union antitrust regulators and a slew of recent opposition from several large advertising organizations. The European Union Competition Commission has been investigating the agreement, while the Association of National Advertisers, World Association of Newspapers and World Federation of Advertisers all issued statements opposing the proposed Yahoo-Google partnership contending that it would raise prices and decrease competition among online advertisers. Google said in a statement that it believed the partnership with Yahoo would be "good for competition" and "benefit advertisers, Web site publishers and consumers." Last week the Mountain View, California-based search giant launched a Web site dedicated to explaining the proposed agreement, and also issued several statements to that effect. Senator Asks For Continuing Scrutiny Of Proposed Yahoo-Google Advertising Deal Another group, the nonprofit American Antitrust Institute, recently released a study (.PDF file) supporting the deal only if it included protections aimed at keeping Yahoo an independent company. Last week a group of San Francisco area lawmakers urged the Justice Department to approve the deal, and noted in a letter that not doing so "could detrimentally affect the online advertising market and electronic commerce." Despite the warnings presented in the Thursday letter, lawmaker Kohl did not ask for the Yahoo-Google partnership to be blocked. "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," Kohl wrote. "Determining the competitive effects of this transaction, moreover, requires us to predict the future of a young and dynamic market," he noted. Some industry observers expected that Justice Department approval would likely not occur without placing certain conditions on the partnership. Other observers consider a blocked deal as a sign of weakness that could result in Microsoft beginning another attempt to acquire struggling Yahoo, which saw stock share prices below $16 this week. Kohl, who held a hearing on the proposed partnership in July shortly after Yahoo and Google announced their plans, again warned of a possible threat to competition in Thursday's letter. "We conclude that important competition issues are raised by this transaction," Kohl noted. Related Links :
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9:24 pm on Oct. 3, 2008 (utc 0)