At a meeting yesterday with reporters, Google CEO Eric Schmidt said his company plans to push ahead with its proposed advertising alliance with Yahoo, even if government regulators say they need more time to review the deal and its potential impacts on competition in the online ad market. Google voluntary delayed the start of the partnership by three months to give regulators a chance to make an evaluation, but, noting "time is money," says Google wouldn’t be willing to wait much beyond the October 11 deadline specified in the companies’ contract.
Schmidt also noted that while Google has been working with regulators who are evaluating the deal, he doesn’t know what their position might be.
The potential advertising tie-up between Google and Yahoo has drawn antitrust scrutiny because the two companies account for over 80 percent of the Internet search market in the U.S.—with Google itself accounting for a substantial majority of that share. Other search competitors—notably Microsoft, but also consortiums of online advertisers—say the deal gives Google too much control over the online advertising market.
Google has countered that it doesn’t set prices sort search advertising—they’re determined by advertisers themselves in an auction process—and that under the deal, Yahoo will be able to decide which Google-supplied ads can be viewed from its sites.
The ad tie-up stems from earlier this year, when Yahoo was in a protracted tussle with Microsoft, which was trying to take over the company. An experimental ad link-up between Yahoo and Google gave Yahoo a potential financial lifeline as Microsoft tried to reel in the Internet giant—or at least its Internet search business. Microsoft eventually walked away from trying to take over Yahoo, and now Yahoo needs to prove to its shareholders that keeping the company independent was the financially smart thing to do.
Yahoo thinks an advertising deal with Google will add about $800 million a year to its bottom line; Google hasn’t speculated on how much money it would make on the deal, save to characterize it as a lower figure than Yahoo’s share.
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