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Apr-24-2008Google-Yahoo test gets antitrust scrutiny(topic overview)
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Justice Department spokeswoman Gina Talamona would say only that the agency was "aware of the collaboration." In an e-mailed statement, Google spokesman Adam Kovacevich said, "We informed the Justice Department before we launched this test, and we have been responsive to their questions about it." Yahoo spokeswoman Tracy Schmaler said the company "proactively kept the Department of Justice informed of its intention to conduct this limited test with Google and has provided information to DOJ on the nature of the test." Google conducted 59.8% of all U.S. searches last month while Yahoo had 21.3%, according to research firm ComScore Inc. When they announced their test, Microsoft complained that any "definitive agreement" between Google and Yahoo would make the search advertising market "far less competitive." "It's easy to see how there would be antitrust questions about something like that," said Gary Reback, an antitrust attorney who persuaded the Justice Department to pursue its landmark antitrust case against Microsoft in the 1990s. When the software giant made its unsolicited bid for Yahoo in February, the department said it would review the deal if it was completed. [1] Many antitrust experts however have warned that a broader search advertising partnership between the two companies would face serious objections, as it would further solidify Google'''s dominant position in that market. Google and Yahoo have spoken in generally positive terms about the test, but have declined to reveal its results or discuss whether they were contemplating a broader deal. "Yahoo proactively kept the Department of Justice informed of its intention to conduct this limited test with Google and has provided information to the DOJ on the nature of the test," a Yahoo spokesman said.[2]
The Justice Department is investigating the possible antitrust allegations of Yahoo's (YHOO) deal to test the use of Google's (GOOG) advertising services, according to Reuters. Both companies say they informed the DOJ about the test before it began.[3]
Google and Yahoo said Wednesday that they notified the Justice Department before the start of a joint search advertising test that could lead to a broader partnership between the two companies. The two Internet giants also said they have answered questions from Justice Department officials about their arrangement. "We informed the Justice Department before we launched the test and we have been responsive to their questions about it," said a Google spokesman. A Justice Department spokeswoman declined to comment, citing a policy not to discuss its reviews.[2] WASHINGTON (Reuters) - Google Inc (GOOG.O: Quote, Profile, Research ) and Yahoo Inc (YHOO.O: Quote, Profile, Research ) told the Justice Department about a two-week test combining some of their search and advertising business before it happened, the two companies said on Wednesday. "We informed the Justice Department before we launched this test and we have been responsive to their questions about it," Google spokesman Adam Kovacevich said.[4] The Web-search leaders say the Justice Department is looking into their experiment with ad collaboration. WASHINGTON -- Yahoo Inc.' s short experiment with outsourcing some of its Web-search ads to Google Inc. has drawn scrutiny from antitrust regulators, the companies said Wednesday. Yahoo and Google said they had provided the Justice Department with unspecified information in response to questions about the two-week test, which was designed to explore how a possible collaboration could help Yahoo thwart Microsoft Corp.' s takeover bid. Microsoft is busy planning its next move in the buyout fight for Yahoo.[1] The U.S. Justice Department is looking into possible antitrust implications in Google Inc.'s search test with Yahoo Inc., according to reports Wednesday. Earlier this month Yahoo said it would begin a limited test of Google's AdSense for Search service, which will deliver relevant Google ads alongside Yahoo's own search results.[5] NEW YORK (Thomson Financial) - Shares of Yahoo Inc. and Google Inc. dipped slightly, before rebounding, amid a report that the U.S. Department of Justice was looking into the companies' search test deal.[6]
The U.S. Department of Justice is investigating Yahoo's recent collaboration with Google (GOOG) on search advertising, a key defense against Microsoft's (MSFT) takeover bid. Yahoo (YHOO) and Google completed a two-week trial last week that both declared a success. In it, Yahoo outsourced search ad sales on about 3% of its inventory to Google, an experiment that could lead to a full-blown search-ad deal between the two, giving a $500 million annual boost to Yahoo's cash flow projections. More importantly, it could force Microsoft to boost its bid for the company.[7] According to Reuters, The Department of Justice has opened an anti-trust investigation relating to Yahoo???s test of Google advertising in search results. The DOJ is looking into whether or not there were anti-trust implications of Google CEO Eric Schmidt contacting Yahoo CEO Jerry Yang after Microsoft made its unsolicited acquisition offer.[8] Justice department officials are also looking in to a telephone call in which Google CEO Eric Schmidt offered Yahoo counterpart Jerry Yang help in rebuffing Microsoft's $44.6bn marriage proposal.[9]
Reuters says the investigation is focused on a phone call from Google CEO Eric Schmidt to Yahoo CEO Jerry Yang offering to help defend against Microsoft's $44.6 billion takeover bid.[7] The test run is part of Yahoo!'s attempt to find a strategic alternative to an unsolicited takeover bid by Microsoft MSFT. An unnamed source told Reuters that the government is particularly concerned about a phone call from Google's Chief Executive Eric Schmidt to Yahoo's CEO Jerry Yang, in which he offered his help in dodging a Microsoft merger.[10]
Citing "sources informed about the matter," the Reuters story says that some of the government's concern focused on a telephone call from Google CEO Eric Schmidt to Yahoo CEO Jerry Yang offering to help thwart Microsoft's $31-a share cash-and-stock offer to buy Yahoo.[3]
Yahoo said the testing does not necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google would result. Yahoo has been talking with Google as part of its search for alternatives to Redmond, Wash. -based Microsoft's (NASDAQ: MSFT) unsolicited $44.6 billion acquisition offer.[5] Yahoo is getting a lot of attention lately because of Microsoft's unsolicited buyout offer and consequent decision to place Google ads alongside its search results for 2 weeks.[11] When it reports first-quarter results on Tuesday, Yahoo has perhaps a last chance to demonstrate some financial strength and progress it has made in stabilizing the company's Internet media and advertising business after two years of decline. Mid-week, Yahoo is set to complete a test with Google Inc (GOOG.O: Quote, Profile, Research ) on whether Google should run a piece of its Web search ad sales, a move sources familiar with the talks say is part of a plan to merge with Time Warner's (TWX.N: Quote, Profile, Research ) AOL and fend off Microsoft.[12] Time runs out by Saturday, the date Microsoft (MSFT.O: Quote, Profile, Research ) has set for Yahoo to accept the deal or face a drawn-out proxy battle by Microsoft to unseat Yahoo's board. Two weeks ago the software giant threatened to lower its offer if Yahoo did not conclude friendly merger talks with Microsoft by April 26th. Yahoo's chief technology officer will use a speech on Thursday at the Web 2.0 Expo industry show to spell out a strategy to open up Yahoo services such as e-mail, news, sports and advertising to make them more relevant across the Web, not just for users drawn inside its own sites.[12] People familiar with the company's strategy said Microsoft did not expect to reach a deal before the Saturday deadline it set for Yahoo to accept the unsolicited bid, so the software giant intends to launch a proxy fight next week and nominate candidates for Yahoo's board. The people, who requested anonymity because of the sensitivity of the talks, said they didn't expect Microsoft to carry out its less explicit threat to lower its offer price.[1]
Earlier in the day, Reuters reported that the Justice Department had launched an investigation into the companies''' arrangement. The two-week test, which was expected to end this week, was part of Yahoo'''s efforts to fend off Microsoft'''s takeover attempt or to try to extract a higher offer from the software giant.[2] The Justice Department is concerned that a two-week test run that Yahoo! initiated with Google may violate antitrust law, according to Reuters.[10] Robert E. Litan, a senior fellow at the Brookings Institution and an antitrust official in the Clinton administration, said the Justice Department might be looking into the possible implications of a long-term collaboration between Google and Yahoo. An investigation into a short-term arrangement is unusual, he said, but the length does not matter under antitrust law. "If two people or three people get in a room and just temporarily price-fix. that would be against the law," he said. "There's no immunity just because it's a short-term deal."[1] The story reports that a second source said the Justice Department was concerned about a longer-term deal between the two companies, and that an initial inquiry into the matter is underway. Does this really surprise anyone? Google, after all, has 60% or more of the domestic search market; Yahoo has another 20% or so.[3] According to Reuters, Justice Department chaperons are investigating Yahoo's test of Google's ad engine. Recently, the two companies signaled their limited, two-week fling could blossom into a full-fledged partnership. These long-range plans appear to be cause for concern at the Justice Department, and it's not hard to see why.[9] The Justice Department scrutiny doesn't seem to have taken anyone by surprise at Google and Yahoo. Both companies gave antitrust officials a heads-up about their plans before ever going forward with the test.[9] Apr 23 - The U.S. Justice Department is investigating possible antitrust implications of Google's 2 week test with Yahoo.[13] SAN FRANCISCO - The Justice Department is reportedly looking into antitrust implications of Yahoo!'s YHOO decision to outsource some of its online ads in the U.S. to Google GOOG.[10]
Yahoo said separately that it also spoke to antitrust regulators. "Yahoo proactively kept the Department of Justice informed of its intentions to conduct this limited test with Google and have provided information to DOJ on the nature of the test," Yahoo spokeswoman Tracy Schmaler said.[4]
Reuters also reported that the DOJ was looking at the phone call Google's chief executive made to Yahoo to offer help in fending off Microsoft Corp. (nasdaq: MSFT - news - people ) from buying Yahoo. Reuters News Service is a unit of Thomson Reuters, which also owns the publisher of this report.[6] Just prior to the release of the news, the Yahoo (nasdaq: YHOO - news - people )'s stock was around $28.07 and Google (nasdaq: GOOG - news - people )'s was around $544.19.[6]
Yahoo management doesn't want to sell to Microsoft. It has sought alternatives, including trying to boost the profitability of its search-engine advertising by outsourcing some of its results to market leader Google. Yahoo said the test, which ended Wednesday, would involve no more than 3% of its search results. [1] Under the test, Google would deliver ads alongside approximately 3 percent of Yahoo search results in the United States. The test was intended to show how much more revenue Yahoo could extract from its search engine by outsourcing the search ads to Google, whose technology is better at matching ads to queries.[2] Google and Yahoo return 63 per cent and 17 per cent of the world's searches, respectively. If Yahoo expanded the partnership to cover all its searches (it's less than 3 percent now), Google's ad engine would accompany 80 percent of all search results.[9]
Yahoo's recent dalliance with Google's search advertising business may be getting a little adult supervision from U.S. trust busters, who are concerned it could violate antitrust law.[9] Reuters reported that the DOJ was concerned that the Yahoo/Google search test deal may violate antitrust law.[6] A source tells Reuters that the Justice Department is concerned the test might violate anti trust law. A second source said the concern was about a longer term deal.[13]
This also seems to be the wrong video. It's supposed to be about the Justice Department's attempts to prevent Yahoo! from saving itself from the depredations of Microsoft.[13] A person familiar with the matter said the Justice Department has asked questions about the arrangement and had not reached any conclusions about whether it posed any antitrust problems.[2]
Neither Google nor Yahoo would say what type of questions the antitrust regulators asked.[1] Any combination of Google and Yahoo, the top two search engines, raises antitrust concerns.[1] Antitrust concerns about a relationship between Google and Yahoo! have existed ever since rumors about the possibility came to the surface.[10]
SAN FRANCISCO (Reuters) - Yahoo faces a critical week that could decide whether the pioneering Web company can remain independent or must surrender to an unsolicited takeover by Microsoft. Yahoo (YHOO.O: Quote, Profile, Research ) is racing to forge a credible alternative that lets it stay independent or at least forces Microsoft to raise its $31 a share cash-and-stock bid, now valued at $42.8 billion (21.5 billion pounds). [12] Yahoo did just well enough in the first quarter for it to be able to hold its head up high as it tries to justify its continued rejection of Microsoft's hostile bid.[2]
Analysts say Yahoo!'s first-quarter results were not good enough to stop Microsoft from acquiring it. The ball's in Microsoft's court after the Internet company beats earnings estimates and boosts its full-year profit forecast.[10] The test is expected to last up to two weeks and will be limited to no more than 3 percent of Yahoo search queries, the company said.[5] The test of Google advertising, first announced on April 9th, has "yielded positive results" according to a report in The Wall Street Journal last week.[8]
Yahoo was last down 1.7% at $28.09 and Google was 2.1% lower at $543.20.[6] Yahoo! has been scrambling to find alternatives to the Microsoft merger, including engaging in talks with Time Warner's TWX AOL division as well as News Corp. NWS.[10] The Bush administration using antitrust law to help Microsoft destroy Yahoo! Oh, the irony.[13]
I have very little sympathy for Microsoft. With all of their illegal activities over the years and being investigate by the DOJ twice their complaints fall on deaf ears. I have no particular love of seeing google grab more marketshare but honestly I don't get this.[8] Microsoft argued the test was illegal from the start, and apparently someone at the DOJ agrees.[7]
Many observers have maintained that a deal between the two wouldn't fly because of Google's dominance in the search market. [10] Our network comprises business and financial news web sites read by millions of business decision-makers around the world. Barron's is America's premier financial magazine, renowned for its market-moving stories and in-depth reporting.[3]
SOURCES
1. Yahoo-Google test gets antitrust scrutiny - Los Angeles Times
2. Google-Yahoo Test Gets DOJ Questions - Bits - Technology - New York Times Blog
3. Tech Trader Daily - Barron's Online : Justice Department Probes Yahoo's Test Of Google Ads
4. Yahoo, Google say talked to DOJ about 2-week test | Reuters
5. Report: Regulators looking at Google/Yahoo AdSense test - East Bay Business Times:
6. Yahoo, Google dip, then rebound after report of DOJ concerns - Forbes.com
7. DOJ Investigating Yahoo's Ad Pact With Google - Silicon Alley Insider
8. Report: DOJ Investigating Yahoo-Google Ad Test
9. Google and Yahoo fling earns Justice Department's evil eye | The Register
10. Justice Examining Google-Yahoo! Test | Internet | GOOG MSFT NWS TWX YHOO - TheStreet.com
11. TECH.BLORGE.com
12. Clock ticks down for Yahoo | News | Reuters
13. YouTube - Yahoo under search test scrutiny
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