October 14th, 2008
Yahoo, Google, DOJ play let's make a deal; Google could walk
Google and Yahoo are talking to the Department of Justice about heading off an antitrust suit over the companies’ search advertising deal.
According to the Wall Street Journal, Google and Yahoo are offering up concessions to the Department of Justice to push their deal through. For Google, Yahoo is just more volume. To Yahoo, Google is a way to better monetize its pages. To the DOJ a Google-Yahoo tie-up is worrisome because it consolidates the online ad market in Google’s favor.
The key excerpt here:
In the settlement talks with the government, both companies have discussed concessions. These include capping the volume of Google ads Yahoo would use, assurances that Yahoo would continue to compete in search ads, and a reporting mechanism to ensure compliance, people close to the talks said. U.S. officials hope to impose measures that will ensure that prices advertisers must pay don’t rise significantly after the deal.
There are also possible requirements to disclose the mechanics of the Google-Yahoo relationship.
What’ll happen? My hunch is Google walks. I doubt that Google is going to disclose anything to have a deal with Yahoo. In the short term, however, Yahoo needs the monetization help. Yapping from the cheap seats is Microsoft, which is lobbying the DOJ hard. Google’s deal with Yahoo already succeeded anyway–Microsoft didn’t buy Yahoo.
- So if you’re Google you have to be wondering:
- Why would you acknowledge your market power to the DOJ?
- Do you really need Yahoo now?
- What are the chances that Microsoft would either become a search player or buy Yahoo?
In the end, it all adds up to a graceful walkaway for Google. As for Yahoo, it’ll continue to muddle through.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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