The American Antitrust Institute said Wednesday it thinks the ad agreement between Google and Yahoo may be blocked because of antitrust issues. Norman Hawker, a senior fellow at AAI, released a white paper pointing out several anticompetitive issues with the agreement and provided suggestions.
The paper was released after AAI met with representatives from Yahoo and Google on a number of occasions, according to Hawker.
“The risk harm to competition in this case is exceptionally great because the agreement has the potential to increase Google’s market share to over 90 percent,” said Hawker in an interview with us. “At that point Google would have the power to dictate prices and other terms to advertisers. Yahoo provides the most significant source of competition to Google in paid search, and the agreement has some potential to strengthen Yahoo as a competitor, but it also poses an enormous risk of either weakening Yahoo’s ability to compete or causing Yahoo to exit the market entirely.”
The government cannot force Yahoo to stay in the paid search business, but it can insist on enforceable requirements to ensure Yahoo can continue to develop and deploy Panama, its search technology.
Yahoo has said since the deal was first announced in June that it plans to keep search as part of its core business. “We believe strongly that this agreement will strengthen Yahoo’s competitive position in online advertising and will help to drive a more robust, higher-quality Yahoo marketplace for our advertisers, publishers and users,” Yahoo spokesperson Tracy Schmaler said Wednesday.
Enforceable restrictions could include a decree that stops Yahoo from using Google ads on organic search results outside North America and on any third-part Web sites, according to AAI. Another restriction could prohibit Google and Yahoo from setting minimum bids or reserve pricing for ads. Yahoo may also be forced to…