California Congressional Reps Urge Yes on Google-Yahoo Deal
The Google-Yahoo ad deal gained support in the form of a letter (PDF) from several of California’s congressional representatives asking that the Department Of Justice not to block the proposed arrangement. Led by Google and Yahoo’s "hometown" representative, Democrat Anna Eshoo from Palo Alto, the short letter signed by 11 US House Of Representative legislators […]
The Google-Yahoo ad deal gained support in the form of a letter (PDF)
from several of California’s congressional representatives asking that the
Department Of Justice not to block the proposed arrangement.
Led by Google and Yahoo’s "hometown" representative, Democrat Anna Eshoo
from Palo Alto, the short letter signed by 11 US House Of Representative
legislators so far reads much like it was written by Google and Yahoo to be
posted on their new
fact site about the deal.
The letter keeps repeating the Google-Yahoo mantra of how this is a
non-exclusive deal (and thus, nothing to fear or regulate) and how such
agreements are commonplace:
We are deeply concerned that the Department of Justice (DOJ) may be
considering a preemptive lawsuit to block Yahoo’s non-exclusive online
advertising agreement with Google. If such action were taken, we believe
such an unprecedented suit could detrimentally affect the online adverting
marketing and electronic commerce…
To our knowledge the DOJ has never before taken preemptive action against
a non-exclusive contractual agreement of this type. Similar agreements are
commonplace in many industries and standard among Internet companies. In
fact, Microsoft had a similar agreement with Yahoo! and Google has similar
arrangements with tens of thousands of companies.
Well, not quite. Yes, competitors on the internet have also often had
"coopetition" agreements with each other. But no, we’ve never had the number
one search player get this type of reach into the number two player’s ad
inventory. The closest I can recall this happening is when GoTo (later
Overture and then Yahoo Search Marketing) managed to get agreements for paid
search distribution for every major search engine but Google.
Hey, that’s proof that competition does work, right? After all, GoTo got
beat by Google, in the end. Well, GoTo also wasn’t running a popular
consumer-facing site of its own that provided the majority of its search
traffic. So, the two situations aren’t directly comparable.
Still, what really gets me in this letter (and I’m still generally
favorable about the deal) is the idea that Google has arrangements with tens
of thousands of other companies that are just like this one. No — people
using a self-serve system to carry Google’s ads on small sites that have
little traffic is entirely different in scope, scale and possible concern
than the Google-Yahoo deal.
The letter goes on:
We believe that robust competition serves the public interest but ff the
DOJ blocks this agreement we fear that the threat of additional scrutiny may
chill future agreements. The competitive and disruptive nature of the
Internet makes it extraordinarily difficult for any company to dominate. The
rapid growth of the market and the increased potential in this space invites
more and more competition. However, this growth and innovation could be
stifled if the DOJ blocks this arrangement.
We urge the department to carefully assess the serious consequences of a
challenge to this non-exclusive commercial arrangement and the precedent any
action by the DOJ would establish.
Despite the disruptive nature of the internet, Google has seemed to
dominate quite nicely, thank you very much. But still, I can agree with some
of the concern raised. Will Google now have to wonder about each and every
deal, whether it is sizable enough to push it over a threshold? If
Google-Yahoo doesn’t happen, and Google grows anyway, will it have to divest
itself of partnerships to stay south of some magic share figure that keeps
For more about the deal and some of the complicated issues it raises
about competition, see also my recent posts: