House leaders plan hearing on Google-Yahoo deal

Hearing to raise issues on competitive and privacy concerns of search advertising deal between Yahoo and Google

US Congressional leaders are planning to hold a hearing this summer on the competitive and privacy concerns of a search advertising deal announced last week between Google and Yahoo.

U.S. Rep. Bobby Rush (D-Ill.), chairman of the House Committee on Energy and Commerce's subcommittee on Commerce, Trade, and Consumer Protection, and Rep. Ed Whitfield (R-Ky.), have said they plan to hold the hearing, although they did not specify a date.

Rush said he and Whitfield had intended to hold a hearing on the privacy and competition issues raised by online advertising, but the "announcement of an online advertising partnership agreement between Google and Yahoo is yet another example of the rapid changes in this market, and further underscores the need for close scrutiny of the impact on consumers."

U.S. Rep. Joe Barton (R-Texas), the House Energy and Commerce Committee's ranking Republican, wrote to Yahoo CEO Jerry Yang Wednesday to express his reservations about Yahoo's deal with Google.

"Given the consolidation within the online advertising industry, and with three companies dominating the U.S. online search market, I am concerned about how this collaboration will impact competition within the online search advertising industry," said Barton in the letter. "I am also concerned about how the relationship between Google and Yahoo will affect the collection, storage, and use of data relating to an individual's online activity."

Barton said he was concerned about the potential for data to be shared or merged and used in ways that users of the two companies may not have anticipated.

"[That] raises a number of questions about consumer protections and privacy," Barton said.

Sen. Herb Kohl (D-Wis.), chairman of the Judiciary Committee's antitrust subcommittee, has also expressed concerned about what the deal might mean for competition and user privacy and said he plans an investigation, according to The Washington Post.

Wednesday, Yang made the rounds in Washington, meeting with members of Congress who are concerned about the competition and privacy implications of its deal with Google, said Yahoo spokeswoman Tracy Schmaler in an e-mail.

"Yahoo is deeply committed to building on our established trust with users by continuing to provide clear, comprehensive privacy policies," Schmaler said in an e-mail. "We structured the agreement with Google so that Yahoo will not transfer any personally identifiable information to Google without user consent. We have also designed this agreement so that both companies have stayed within each of their existing privacy and data policies, such as Yahoo's policy regarding logs anonymization after 13 months."

Google could not be reached for comment.

Last week, Google and Yahoo announced that Yahoo will start running advertising from Google alongside Yahoo search results in the U.S. and Canada. The two companies said that although the deal doesn't require regulatory approval, they would delay its implementation for three and a half months while the U.S. Department of Justice reviews the arrangement. Various groups, ranging from farmers to Microsoft, have expressed concern about the deal.

Yahoo said it expects the nonexclusive deal to generate US$250 million to $450 million in operating cash flow during the first 12 months, and that it represents an annual revenue opportunity for Yahoo of $800 million. The deal is for an initial period of four years, with an option for Yahoo to extend it for another six years.

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