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Are Yahoo and Google Playing Monopoly?


Ad partnership raises antitrust concerns.


The Association of National Advertisers (ANA) says the online partnership between Yahoo (YHOO) and Google (GOOG) will erode competition and probably result in higher prices.

On its website, ANA, which represents about 400 companies, says it sent a letter to the US Justice Department's antitrust division after reviewing the agreement and meeting with executives from Yahoo and Google.

The letter "notes that a Google-Yahoo partnership will control 90% of search advertising inventory and expresses concern that the partnership will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising," the trade group said on its website.

The ANA didn't release the text of the letter to Assistant Attorney General Thomas O. Barnett.

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The Yahoo-Google partnership announced in June calls for Google to sell some ads displayed with search results on Yahoo's website. Yahoo signed the deal after rejecting a $47.5 billion acquisition bid from Microsoft (MSFT).

"Why did we make this agreement?" Google asked in a June 12th announcement posted on its website. "Quite simply, we think it is good for users, advertisers and publishers. By offering Google's industry-leading technology to Yahoo, the whole system becomes more efficient, and everyone benefits."

Google said consumers will see more relevant ads, advertisers will benefit from Google's technology and ads will reach target audiences more efficiently. Google said:

"We also think this is good for competition...The truth is, this kind of arrangement is commonplace in many industries, and it doesn't foreclose robust competition. Toyota sells its hybrid technology to General Motors, even though they are the number one and number two car manufacturers globally. Canon provides laser printer engines for Hewlett-Packard, despite also competing in the broader laser printer market. Google and Yahoo will continue to be vigorous competitors, and that competition will help fuel innovation that is good for users."

Consumer groups and some members of Congress have also expressed concern over Yahoo's deal with Google.

Google denied that the deal is part of a master plan to take over the world, and said it would neither increase its share of search engine traffic nor boost advertising prices. Google noted that Yahoo is free to make similar deals with others.

"This does not remove a competitor from the playing field," Google said on its note of June 12. "Yahoo will remain in the business of search and content advertising, which gives the company a continued incentive to keep improving and innovating. Even during this agreement, Yahoo can use our technology as much or as little as it chooses."

We'll see if antitrust laws intended for heavy industries such as railroads, steel and oil have relevance in the digital age. Google is right about competing companies buying technology from each other - but when the company says Yahoo is free to sign similar deals with others, the obvious question is: Like who?

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