Google threatens to take Yahoo ball and go home
By John Lister
Google may be on the verge of abandoning plans for an ad-sharing deal with Yahoo. It appears the search giant may be unwilling to accept regulator demands that the deal be kept under permanent review.
Both the Reuters and UPI news agencies quote inside sources as saying the deal could collapse as early as today. It appears Yahoo is happy to do whatever it takes to secure the agreement, but Google is willing to give up the deal rather than accept terms it sees as harmful.
The agreement would mean adverts from Google’s system would appear in Yahoo’s search results, with both sides taking a chunk of the revenue. While the two firms insist it wouldn’t increase their power over ad rates (which are set by auctions among competing advertisers), advertisers are adamant it would reduce competition and thus drive up prices. Microsoft has also complained it would give Google an unfair degree of control in the market.
The US Department of Justice has now been investigating the deal since early September to see if it needs to be refined to avoid breaching anti-trust laws. The biggest hold-up appears to be that the DOJ wants the two sides to sign a consent decree. That’s a legal document which acknowledges that a business deal between two or more firms has the potential to be anti-competitive if not kept in check, and gives government the right to monitor the firms’ behavior indefinitely.
While its possible Google may simply be fed up of the legal hassle, there’s a good chance it’s trying to pressure the DOJ into a more favorable agreement. After all, even if Yahoo could survive without the money the ad deal would provide, its stock would likely take a battering. That might well be enough to leave it to either collapse or fall prey to a Microsoft takeover, both of which could lead to job losses. Given the wider economy, government bureaucracy getting the blame for that outcome would be a serious image blow to officials.
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