Yahoo! in Search Ad Test With Google

 
Nearly immediately after Yahoo!'s announcement of the Google test, Microsoft issued a statement from Brad Smith, its general counsel, raising antitrust concerns: "Any definitive agreement between Yahoo! and Google would consolidate over 90 percent of the search advertising market in Google's hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers and consumers."

Although Google could argue that the auction-based nature of the search market makes it open to competition, the plan would still run into opposition from advertisers, predicted Bryan Wiener, CEO of 360i, a New York digital agency. "There's a fair amount of opaqueness in the auction," he said. "It's not entirely clear what price it takes to win. They're making algorithmic changes that are proprietary."

He added, "This would create a monopoly where Microsoft-Yahoo! would consolidate the second and third place players."

"Yahoo!'s biggest competitive advantage is they have the best combination of search and display," Wiener said. Their display network is better than Google's. By eliminating the ability to integrate search and display, it is a significant retreat from their ability to provide marketers with integrated campaigns."

Yahoo! said in its statement that it would not comment on a possible future agreement with Google. The company noted that "the testing does not necessarily mean that Yahoo! would join the Adsense for Search program or that any further commercial relationship with Google will result."