Google-Yahoo online deal postponed

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Google has decided that it will postponed a planned online advertising deal between it and Yahoo to allow the US anti-trust regulators to consider the ramifications of the deal. The anti-trust investigation is the first of its kind, as the Department of Justice (the regulators) usually perform investigations in an event of a merger.

The new deal, according to Microsoft’s senior vice president and general counsel Brad Smith, would put Google “unprecedented” control of the world’s internet advertising market, after acquiring Double Click in early 2008; telling to a Senate subcommittee: “If search is the gateway to the Internet, and most believe that it is, this deal will put Google in a position to own that gateway and the information that flows through it.”

However, Yahoo’s president Sue Decker wrote in a blog post titled Myth-busting and the Yahoo!-Google agreement, “It’s simply a contract that gives Yahoo! the right, but no obligation, to show Google AdSense ads on Yahoo!’s own network.”

“It’s important to note that the agreement is non-exclusive and gives us the option to “backfill” with Google ads if and when we see fit. The reason we structured the deal this way – rather than a more typical exclusive deal with revenue commitments to us and traffic commitments to Google – was precisely to avoid the issues the critics are raising.”

But eleven California state political leaders are urging with the Justice Department not to interfere with the proposed deal, saying that the internet market growth and innovation “could be stifled” by blocking the alliance.

"We are deeply concerned that the Department of Justice may be considering a preemptive lawsuit to block Yahoo’s non-exclusive online advertising agreement with Google," the eleven leaders wrote in the letter.