Google ramps up defense of Yahoo ad search deal

Google came out swinging this week in defense of its controversial search advertising agreement with Yahoo.

The Internet search giant posted an FAQ on its proposed partnership and its affect on advertising prices on its public policy blog Thursday and followed it up with another posting Friday on its potential effect on competition.

In both cases, Google makes the argument that the deal would not harm competition nor lead to increased advertising prices.

But the blog postings were only part of its busy week. On Wednesday, Google Chief Executive Eric Schmidt told reporters during a press conference that the company planned to proceed with the deal, in absence of any challenge from regulators. The companies expect to move forward with the deal in the second week of October to mid-October, one source familiar with their plans said.

But what Yahoo and Google have not made clear is what their plans will be should the antitrust division of the Department of Justice, or a multi-state task force, announce plans to challenge the deal by filing a lawsuit to block it, or should regulators seek a temporary or permanent injunction. The companies, for example, could demonstrate their resolve and still move forward with the partnership, despite knowing it would wrap them in legal wrangling with regulators.

Google, however, said in a statement:

"When we announced our deal with Yahoo we agreed to give the Department of Justice several months to review the deal before we began implementing it, and we continue to cooperate with regulators as that process continues. Ultimately we have confidence that they'll be able to conduct their review within that time period and allow us to move forward."

And on Tuesday, Google's chief economist Hal Varian disputed reports of potentially higher advertising costs should his company do its advertising search partnership with Yahoo in his blog.

Such efforts by the Internet giant follow a couple of events last week which may not bode well for its nonexclusive partnership agreement with Yahoo. The Association of National Advertisers announced its opposition to the Google-Yahoo deal. And, on top of that, word began to spread that the Department of Justice had hired seasoned antitrust litigator Sandy Litvack to assess whether a case could be won in trial against the partnership.

[HighwayHome]

Google and Yahoo's combined share of the search market is what, about 80%? Is this not enough to raise serious collusion questions between the two? If not, then the regulators definitely see no evil where Google is involved.

Second, since Yahoo! is projecting collecting a nice piece of change from this deal (estimated anywhere from $250M-$800M annually), where exactly is this money coming from? Maybe Google will give Yahoo! this money out of the kindness of their hearts and be nice enough not to pass the cost on to their advertisers. And while they're being so altruistic and generous, how about a reduction in their ad prices also? What hogwash.

[The_Decider]

I despise Google, but you can't say market share alone is enough to trigger regulation.