At the request of the World Association of Newspapers (WAN), an international organization for the newspaper industry, the European Commission’s Competition Directorate has launched an inquiry into a proposed online advertising relationship between Google and Yahoo.
In June, the two Web giants announced that advertisements from Google’s AdSense program would appear on Yahoo sites alongside Yahoo’s own advertisements. The U.S. Justice Department is already reviewing the proposed arrangement to see if it violates antitrust laws. According to most estimates, Google and Yahoo will control as much as 80 percent of the North American online advertising market when the deal goes into effect in October.
Gavin O’Reilly, president of WAN, said in a letter to the head of the Competition Directorate that the arrangement would give Google too much control over online advertising prices.
“In our view,” O’Reilly said, “the proposed advertising deal between Google and Yahoo would seriously weaken [advertising rate] competition, resulting in less revenues and higher prices for our members. WAN is also concerned that this deal would give Google unwarranted market power over important segments of online advertising.”
EU Probe Is Unwelcome News
According to Jeff Chester, executive director for the Center for Digital Democracy, the planned inquiry by the European Commission will be unwelcome news for the two Internet companies, since European regulatory standards are often stricter than those in the United States.
“The deal was hatched to avoid the EU and Asian regulatory scrutiny by launching first in North America,” Chester said. “But once approved here, it will undoubtedly be extended.”
WAN’s O’Reilly agreed, warning in his letter that the companies’ extensive control of online advertising rates could affect newspaper revenues in Europe. He also pointed out that European newspapers will be affected directly, since many have an online presence in North America as well.
Chester also argued that the new advertising arrangement…