Antitrust scrutiny holds up Yahoo-Google deal
Published: 06 Oct 2008 09:18 BST
Yahoo and Google are delaying implementation of their search-ad deal to give US Justice Department antitrust investigators more time to look into the deal, according to published reports.
Kara Swisher (of website All Things D) and Bloomberg reported the delay on Friday afternoon.
Under the Yahoo search-ad deal with Google, which had been set to go into effect this month, Yahoo plans to display some Google search ads where its own ad-delivery technology doesn't work as well. Yahoo expects $800m in new revenue in the first year of the deal.
"The companies have agreed to a brief delay in implementing this agreement to continue our ongoing discussions with the Department of Justice. We have had discussions with regulators and look forward to responding to their questions about this agreement," Yahoo said in a statement.
Google added: "When we announced our advertising agreement with Yahoo in June, we agreed to delay its implementation until October to give regulators time to look at the details. As we are still in conversation with the Department of Justice we have agreed to a brief delay in implementing the agreement while those discussions continue."
Yahoo wouldn't clarify how long the brief delay would last, but it's likely the companies will want it done before a new administration is elected one month from now and major changes could take place within the US Justice Department. Reuters quoted an unnamed source who said the companies still expect to begin in October.
The companies gave themselves three-and-a-half months to implement the deal, saying they wanted to give antitrust regulators time to review it. With the June announcement date, that would have put them in early October.
However, the companies have not been specific about when they planned to flip the switch. In a September meeting with the press, Google chief executive Eric Schmidt wouldn't be pinned down beyond "roughly the beginning of October".
The partnership has come under antitrust criticism from Microsoft — whose attempt to acquire Yahoo helped fuel the Yahoo-Google partnership — and from the Association of National Advertisers (ANA), the World Association of Newspapers (WAN) and Center for Digital Democracy. The European Commission is also investigating the partnership.
Some Democratic lawmakers from California, however, urged the DOJ not to block the deal. They criticised in particular the possibility of Justice Department legal action before the deal takes effect.
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Facing the criticism, Google and Yahoo both have begun a publicity offensive. Google published a frequently-asked-questions site, and Yahoo president Sue Decker weighed in with her own defence last week. Yahoo has also published a site with partnership details to try to make its case.
Several US states are also reviewing the deal, and Connecticut attorney general Richard Blumenthal said there's been a two-week extension of the antitrust review. The deadline for review moved from 8 October to 22 October, Blumenthal said.
"We are doing our review in conjunction with the DOJ, so I'd think our timetables are aligned," Blumenthal said.
Although it's notable that Yahoo and Google are giving antitrust regulators more time to review the deal, it's a step other companies have taken in the past, former DOJ antitrust attorneys said.
Deadlines can be pushed back as needed. One former attorney said companies are usually happy to give regulators more time to evaluate a transaction rather than push the issue, for fear it will back the regulators into a corner and cause them to file a lawsuit to block the deal. Another source said delays are part of the natural ebb and flow of negotiations.
The top brass of the Justice Department's antitrust unit met with Google and Yahoo months ago, a departure from the more traditional path in which the DOJ staff issue a recommendation to the department's front office about whether a deal should be rejected. Traditionally, only then do the companies make their case before antitrust chieftains.
CNET News staff writer Dawn Kawamoto contributed to this report.
Credit: 'Brief delay' for Yahoo-Google search-ad deal from CNET News.com
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