Yahoo! and Google could together control 90 percent of ad market

The House Judiciary Committee Task Force on Competition Policy and Antitrust Laws met to discuss the potential effects of a Yahoo!-Google agreement on search advertising. Steven Chabot (R-Iowa) said that search engines must maintain competition to remain a neutral tool. The potential deal between the two Internet giants raised questions of a monopoly.

Michael Callahan, Executive Vice President and General Counsel for Yahoo!, said that the proposed agreement is not a merger. Yahoo! and Google’s nonexclusive deal assures that the two companies will increasingly compete and remain autonomous. He said the deal is good for advertisers as well as consumers. David Drummond, the Senior Vice President of Corporate Development and the Chief Legal Officer for Google, Inc. contended that the agreement would actually increase competition over search advertising. He said that the deal involves Yahoo! keeping its own search platform, but showing some Google ads. Tim Carter, the President and Chief Executive Officer of AsktheBuilder.com said that the deal will bring hundreds of millions in revenue to Yahoo!, thus making it more competitive with Google and keeping other companies on their toes.

Brad Smith, the Senior Vice President, General Counsel, and Corporate Secretary for Microsoft Corporation said the agreement would actually concentrate power over search advertising, with Yahoo! and Google together controlling 90 percent of the market, thus decreasing competition. He added that the deal would reduce options for advertisers, increase ad prices, and create online privacy implications. David Sable, Vice Chairman and Chief Operating Officer for Wunderman, said the agreement would create price-fixing and a non-competitive market. He said that the majority of people use different search engines and this element of choice must be maintained in the market to prevent a monopoly.

Google and Yahoo searching for support

The Google-Yahoo! agreement and the future of advertising on the Internet was discussed by the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights. After tapping elbows with Sen. Arlen Specter (R-Pa.), Yahoo! and Google representatives defended an agreement in which Yahoo! would outsource advertising space to Google, an agreement that was met with support and anxiety.

General Counsel for Yahoo! Michael Callahan and David Drummond, Google’s chief legal officer, explained the agreement between the two companies. Both stated that Yahoo! will not exit the online search business and that the agreement will allow web-based advertising to become a more competitive business. In response to concerns that consumers will only purchase advertisements through Google in anticipation that they will also appear on Yahoo!, Drummond and Callahan said Yahoo! will determine when Google ads will appear on Yahoo! and that consumers will need to buy advertising space on Google and Yahoo! to guarantee exposure on both websites,

Senior Vice President at Microsoft Brad Smith explained his opposition to the agreement between Google and Yahoo! Smith said that the agreement would result in an unprecedented concentration of control in a market, stating that combined, Google and Yahoo! control 90 percent of the online search market. Smith added that Yahoo! CEO Jerry Yang told Microsoft that an agreement between Yahoo! and Google would remove Microsoft as a competitor, a move Smith called a monopoly.

Tim Carter, CEO of askthebuilder.com, told the subcommittee it would be un-American to prevent a company from helping its stockholders. Carter said Google’s ability to provide Americans with reliable results has brought Google a 70 percent share of the online search market and that Congress should not punish a company for performing well.