How can Google, the Internet search and advertising giant, contend that teaming up with Yahoo in search ads would not invite an antitrust challenge?
Under a proposed partnership, Google would let Yahoo use its more sophisticated ad technology to deliver ads next to some Yahoo search results. By some estimates this could bring Yahoo $1 billion a year in added cash.
If they strike a deal, Yahoo, the No. 2 company in search ads, would hand over some of its business to Google, the No. 1 company in that market. When asked about the issues this would raise in a meeting with reporters this month, Eric Schmidt, Google’s chief executive, offered only a cryptic reply: “We would anticipate structuring a deal to address antitrust concerns.”
People involved in shaping Google’s approach say the deal under consideration would be a straightforward supplier arrangement, similar to ones in the markets for computer printers, appliances and cell phone service.
The printer industry, they say, is a perfect example. Canon supplies printer engines to about 80 percent of the laser printer market, including its rival Hewlett-Packard. They point to many others, including Whirlpool’s making of appliances for Sears, AT&T’s licensing of its mobile network to Virgin Atlantic and other small carriers, Toyota’s selling of hybrid engines to General Motors and Microsoft’s tailoring of its Office software for Apple computers.
But some antitrust experts say the planned partnership does raise concerns. Whether this pact is completed or not, they add, it points to the kind of antitrust issues that will increasingly surround Google as a dominant company in the Internet economy, which can quickly magnify the market power of corporate winners.
“Up to now, Google has been very careful to avoid predatory behavior,” said Christine Varney, a partner at the law firm Hogan & Hartson and a former member of…