Microsoft goes to Congress over Yahoo-Google deal

Irony still lost in Redmond

Shaun Nichols in San Francisco, vnunet.com 17 Jul 2008

Microsoft has approached Congress over what it claims are antitrust concerns regarding Yahoo's advertising deal with Google.

Brad Smith, general counsel at Microsoft, told a congressional hearing on 15 July that the proposed search advertising deal could harm the market and hinder innovation.

"Never before in the history of advertising has one company been in the position to control prices on up to 90 per cent of advertising in a single medium," he said.

"If search is the gateway to the internet, and most believe that it is, this deal will put Google in a position to own that gateway and the information that flows through it."

Yahoo struck the deal with Google earlier this year as it tried to fend off a takeover bid from Microsoft.

Yahoo estimated that it could generate some $800m in revenue by displaying Google ads in its search results.

But Smith contends that the deal will also allow Google a free rein to raise the prices it charges advertisers.

"When Yahoo talks about this deal generating up to $800m in additional revenue, that is money out of the pockets of American businesses, big and small, which will pay higher prices for the very same ads they buy from Yahoo today."

Microsoft also highlighted what it believes are privacy concerns. The company has publically warned of Google's reach in the advertising market since it acquired DoubleClick in 2007.

Smith reiterated that point on Tuesday, telling Congress that the deal would also give Google free rein over the user information shared with advertisers.

"If one company controls up to 90 per cent of online search advertising it will have a complete picture of your online activities," he said.

"If that happens, Congress will not need to enact a federal privacy policy. We will already have a national privacy policy - Google's privacy policy."

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