23 June 2008

Google/Yahoo! ad collaboration ruffles feathers

Last week's announcement that Google and Yahoo! - the web's best loved search engines - are going to combine forces for a joint advertising venture has caused widespread panic, not least of all in the Microsoft camp.

The deal, which would see Google ads displayed alongside Yahoo! search results in the US and Canada, has raised competitive and privacy concerns.

Naturally, Microsoft - whose recent advances to Yahoo! have been resoundingly rejected - is worried and making rallying calls for support in its opposition to the Googlehoo collaboration, suggesting that the agreement could limit choices for advertisers and publishers and also drive up the price of ads, as Yahoo! would not want to sell advertising space at lower rates than Google.

Speaking to Reuters, Microsoft spokesman Jack Evans said:

"Our position has been clear since April that any deal between these two companies will increase prices for advertisers and start to consolidate more than 90 per cent of the search advertising market in Google's hands."

However, it's not just the directly affected who are making their concerns known. Congressional Representatives have announced that they plan to hold a hearing into the venture, although they are yet to set a date. There are fears that the two search giants joining forces may lead to a lack of competitiveness as Yahoo! would collect revenue regardless of which of the two places an advert.

Antitrust experts are also worried. Evan Stewart, of law firm Zuckerman Spaeder, said:

"At the end of the day, you're going to have to show some very effective computer modelling...to show that consumers are at worst no worse off.

"The Justice Department should have a very healthy scepticism when number one and number two get together for a joint venture and say they're going to compete."

Worries have also been raised about the possibility of Google and Yahoo! sharing or merging data which could lead to user's information being used in unanticipated ways.

Yahoo! CEO Jerry Yang attempted to alleviate fears by saying that "Yahoo is deeply committed to building on our established trust with users by continuing to provide clear, comprehensive privacy policies.

"We structured the agreement with Google so that Yahoo will not transfer any personally identifiable information to Google without user consent."

Last Friday, Googlehoo gave antitrust authorities 100 days to examine their deal before they begin work. It's a partnership that was guaranteed to ruffle feathers, and it certainly seems to be doing just that - and drumming up some publicity for the two search big-hitters along the way.

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