Google: Yahoo pact 'preserves' competition

With Microsoft and others certain to raise antitrust challenges over its pact with Yahoo, Google attempted to make its case Thursday for why the deal should be viewed favorably.

"Quite simply, we think it is good for users, advertisers and publishers," Omid Kordestani said in a blog posted on Thursday. "By offering Google's industry-leading technology to Yahoo, the whole system becomes more efficient, and everyone benefits."

Kordestani said that Google has already been in touch with antitrust authorities. "We have been in contact with regulators about this arrangement, and we expect to work closely with them to answer their questions about the transaction," he said. "Ultimately we believe that the efficiencies of this agreement will help preserve competition."

Microsoft has yet to comment, but it has previously indicated that it sees any deal that Google might strike with Yahoo as potentially anticompetitive.

One U.S. Senator, meanwhile, urged the deal get a close look.

"We will closely examine the joint venture between Google and Yahoo announced today," Senator Herb Kohl, Democratic chairman of the Senate Antitrust Subcommittee, said in a statement. "This collaboration between two technology giants and direct competitors for Internet advertising and search services raises important competition concerns. The consequences for advertisers and consumers could be far-reaching and warrant careful review, and we plan to investigate the competitive and privacy implications of this deal further in the Antitrust Subcommittee."

Here's the full text of Kordestani's blog:

Today, we announced a non-exclusive advertising agreement that will provide Yahoo with access to our AdSense for search and AdSense for content advertising programs on their U.S. and Canadian web properties. In addition, we will work to enable interoperability between our respective instant messaging services allowing users better, broader communication online.

We are proud of the advertising technologies we have built, which show users a relevant ad whether they are searching for a specific item or browsing the internet. This arrangement extends those benefits to Yahoo and its many users, advertisers and publisher partners. We currently provide similar services to sites like AOL and Ask.com as well as many other partners, and we work closely with all of our partners to ensure that our partnership drives their long term success.

Why did we make this agreement? Quite simply, we think it is good for users, advertisers and publishers. By offering Google's industry-leading technology to Yahoo, the whole system becomes more efficient, and everyone benefits:

Consumers will see more relevant ads when they are looking for information and browsing the Web. And with interoperability between IM services, users will have easier access to even more of their contacts.

Publishers currently in the Yahoo Publisher Network will benefit from Google's advertising technology, potentially increasing the revenue they earn from their sites.

Advertisers will have new ways to reach their target customers online more efficiently.

We also think this is good for competition. The truth is, this kind of arrangement is commonplace in many industries, and it doesn't foreclose robust competition. Toyota sells its hybrid technology to General Motors, even though they are the number one and number two car manufacturers globally. Canon provides laser printer engines for HP, despite also competing in the broader laser printer market. Google and Yahoo will continue to be vigorous competitors, and that competition will help fuel innovation that is good for users.

It is important to say what this agreement is not:

This is not a merger. Rather, we are merely providing access to our advertising technology to Yahoo through our AdSense program.

This does not remove a competitor from the playing field. Yahoo will remain in the business of search and content advertising, which gives the company a continued incentive to keep improving and innovating. Even during this agreement, Yahoo! can use our technology as much or as little as it chooses.

This does not prevent Yahoo from making similar arrangements with others. This arrangement is not exclusive, meaning that Yahoo could enter into similar arrangements with other companies.

This does not increase Google's share of search traffic. Yahoo will continue to run its own search engine and advertising programs, and the agreement will not increase Google's share of search traffic.

This does not let Google raise prices for advertisers. Google does not set the prices manually for ads; rather, advertisers themselves determine prices through an ongoing competitive auction. We have found over years of research that an auction is by far the most efficient way to price search advertising and have no intention of changing that.

We have been in contact with regulators about this arrangement, and we expect to work closely with them to answer their questions about the transaction. Ultimately we believe that the efficiencies of this agreement will help preserve competition.

The Internet is a healthy, competitive environment where content creators, advertisers and users come together to access information, communicate and create new business opportunities. We think this deal extends these benefits--it's good for users, advertisers and publishers and good for the industry.

[t8]

I have to agree.

Google is good for the Web and for Web companies and this deal makes it even better.

[JCPayne]

Having a small box with adds on the Internet would raise Anti-trust issues??? Now I know CNET is paid off by Microsoft.

[JCPayne]

This is simple...

Google knows: their bread will be buttered by NOT having Yahoo in Microsoft's camp...
-And-
Microsoft knows: their bread will be buttered by NOT having Yahoo in Google's camp....

No matter what--- a combination of any 2 of these 3 is going to create sour grapes whining from the other member.... This automatically creates a *two member* winning team... And one LOSER... If Microsoft wants Yahoo soo bad-- raise their price.....

[decision_stats]

And why is Google the holy cow of internet ?

Because there slogan is (still ?) dont be evil

Because if you are on the net its impossible to move from one spot to another without needing adwords,adsense,google analytics,feedburner,blogspot,orkut (or face their meddling in FB ,Yahoo valuations )

Does Google ;s loss making deal with My Space sounds like fair competion

Search and Advertising are different things.
They need to be seperated within Google so that there is no conflict of interest and there are no operational synergies (if there is too freedom)


why doesnt google make its own algorithm on search open source (like they do for anything else they lag behind)

(and thus make it a collobrative model ending click fraud)


why dotn they move beyond the cpm inefficient model to cost per lead or cost per purchase ..

and when will the company advised by Al Gore disclose the carbon footprint of ,the jets,the new space mission,and the big big server farms



google uses the search engine hegemony the way microsoft did with it's OS , and uses it finance more ways to collect data and aggressively mine it like gmail,

or any other service which has a default option to share data especially scary for Google book project and google desktop search on the network.....

unlike MS whos content to just get paid a premium for software ..

for advertisers Google and Yahoo make less competition , while Microsoft and Yahoo make more competition..and thats what anti trust is all about...





do not be evil ,just hire smart lawyers ,bloggers and PR people

[nutjob]

This is what Google claimed to be monopolistic when MS was trying to buy Google, why is it not now? Google its Health storage plan and linking gmail to advertisers are creeping toward being evil.

[YankeePoodle]

The advertisers are screwed esp. the ones who dont win the google bid, because they dont have another fallback venue or will they fallback on Microsoft Live. I dont think Google is any different from anyother company certain creative elements seperate it from others but beyond it is just a company.

I still dont get what is the value Yahoo is getting with Google deal they are doing the same mistake that they did before (i.e. outsource search to Google). Now on which verticals is Yahoo trying to rebuild itself and justify a rejection of $33 per share bid.

This deal is bad for every one, but google. I hope some company with great ideas comes and disrupts the whole search world technology.