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Lawmakers call on DOJ to approve Google-Yahoo deal
- — 30 September, 2008 08:50
A group of 11 members of the US House of Representatives has called for the Department of Justice to approve a proposed advertising deal between Google and Yahoo.
The lawmakers, all Democrats from California, urged the DOJ not to block the ad deal, in which Yahoo would run some Google search ads on its Web pages. The group sent a letter to the DOJ Friday.
"We are deeply concerned that the Department of Justice may be considering a preemptive lawsuit to block Yahoo's nonexclusive online advertising agreement with Google," says the letter, signed by a handful of lawmakers representing Silicon Valley. "If such action were taken, we believe such an unprecedented [lawsuit] would detrimentally affect the online advertising market and electronic commerce."
The letter comes amid speculation that the DOJ will move to block the agreement between the two largest vendors of search-related advertising online. Last week, a bipartisan group of 10 members of the House Judiciary Antitrust Task Force asked the DOJ to "closely review" the ad deal.
"New entrants would have significant financial hurdles to cross in order to be competitive," the Judiciary letter said. "Bluntly, competition in the online advertising market would be significantly constrained under a prospective Google-Yahoo agreement."
But opponents of the deal, proposed in June, have misunderstood the effects of the agreement, the California lawmakers said. The fear is unfounded that the deal will allow Google to control 90 percent of the search-based ad market, they wrote. "The agreement is not a merger and therefore does not grant exclusive control of online advertising to either Yahoo or Google," their letter said.
The lawmakers' letter said they believe the DOJ has never before taken preemptive action against such a nonexclusive agreement.
The agreement would allow Yahoo to display Google search ads, but Yahoo says it plans to continue to offer its own search advertising system and compete with Google in basic search functionality and other areas.
Google and Yahoo plan to move forward with the agreement in October. They voluntarily submitted the deal to the DOJ after they announced it in June, and the two companies do not need DOJ approval before implementing the conditions of the deal. The DOJ could file a lawsuit to block the deal before or after it goes live, however.
A Google spokesman said Monday that the company continues to work with the DOJ on the deal. "We are continuing to have cooperative discussions with the Department of Justice about this arrangement and voluntarily delayed implementation in order to give them time to understand the agreement. We are confident that the arrangement is beneficial to competition," said Adam Kovacevich, a Google spokesman.
Among the lawmakers signing the California letter were: Anna Eshoo, Zoe Lofgren, George Miller and Mike Honda.