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Advertisers Stand Together Against Google/Yahoo Partnership

Advertisers seem to be finding strength in numbers when it comes to Google. Individual companies have been hesitant to criticize the search giant’s partnership with Yahoo since it was announced in June, but the Association of National Advertisers came out against it yesterday. The ANA, a trade group that represents companies including Procter & Gamble […]

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Advertisers seem to be finding strength in numbers when it comes to Google. Individual companies have been hesitant to criticize the search giant’s partnership with Yahoo since it was announced in June, but the Association of National Advertisers came out against it yesterday.

The ANA, a trade group that represents companies including Procter & Gamble Co., Wal-Mart Stores Inc., and General Motors Corp., sent a letter to Assistant Attorney General Thomas O. Barnett yesterday recommending that the deal be blocked.

The letter claims that “a Google-Yahoo partnership will control 90 per cent of search advertising inventory," and argues that the merger would be bad for advertisers.

The partnership "will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising," the letter continued.

Google voluntarily submitted to a Congressional investigation when the deal was completed in June as a courtesy, but the company has said that it was not legally necessary. The deal will permit Google to supply areas of Yahoo’s Web search system with Google search advertising. With Google already controlling 70 percent of the search market, the plan has raised anti-trust concerns.

The Justice Department has not made any announcements on the pending investigation, but Google announced confidence in the legality of the deal last month and stated that they were planning to move forward in
October regardless.

While competitor Microsoft has already voiced displeasure with the plan, the Wall Street Journal thinks this complaint may hold more weight:

“As they weigh comments from outsiders, regulators often discount the views of competitors who complain about a deal, as Microsoft has done. They are likely, however, to listen closely to customers, in this case major advertisers, so the association's letter could be a significant hurdle.”

The non-exclusive deal will not combine the companies’ ad inventory, but allow Google to serve up contextual ads from a limited Yahoo inventory.
Yahoo is also free to strike similar deals with other companies, details that both companies have used as a defense against monopoly allegations.

Yahoo reiterated the point in a response to the letter on Sunday:

"We are disappointed with the ANA board's position regarding Yahoo's non-exclusive search marketing agreement with Google... Yahoo remains steadfast in its belief that this deal -– in which prices are determined by advertiser demand-driven auctions, and not by collaboration between Yahoo and Google -– will strengthen Yahoo's competitive position in online advertising and will help to drive a more robust, higher quality Yahoo marketplace for our advertisers."

Photo: Flickr/dannysullivan

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