By Jeff Meisner E-Commerce Times
09/30/08 11:58 AM PT
As the clock ticks down to the planned launch of Google and Yahoo's online advertising deal, the clamor of advocates and opponents is reaching a crescendo. The latest to weigh in is a group of California lawmakers who told the DoJ that the health of the fast-growing Internet ad market depends on the deal going through. Opponents argue that Google and Yahoo would constitute a market monopoly.
Run Your Entire Contact Center in the Cloud Many businesses are increasingly seeking ways to improve the quality, flexibility, and scalability of their traditional call centers. Download this free white paper and learn the top 8 reasons to consider going virtual.
Several Silicon Valley Congress members have urged the U.S. Department of Justice not to interfere in the pending online advertising deal between search engine giants Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO).
Mountain View, Calif.-based Google and Sunnyvale, Calif.-based Yahoo are situated in the heart of Silicon Valley.
The lawmakers outlined their concerns in a Sept. 26 letter to the DoJ, saying that the fast-growing online ad market would be harmed if regulators should decide to block the deal.
The Google-Yahoo alliance has garnered a great deal of criticism from other players in the Internet advertising market since it was first announced last June. The deal gives Yahoo access to Google's inventory of search ads, as well as some of the revenue associated with those ads.
Not Price-Fixing
At the center of the controversy over whether to allow the deal to go through is the fear that Google and Yahoo together would control too much of the online advertising market. Other players in the market include Redmond, Wash.-based Microsoft (Nasdaq: MSFT), Ask.com and other search engines.
Whether there is validity to those fears, though, is questionable.
"People talk about concern over the price-fixing of clicks, but it's an auction-based system," Colin Gillis, an equity analyst with
Canaccord Adams, told the E-Commerce Times. "Truly, it's the advertisers who are bidding on the keywords. It's not a fixed-price system. If advertisers think it's too expensive, they can go to Microsoft or Ask.com."
The proposed deal is not the first Google and Yahoo collaboration, Gillis noted.
"Google has powered Yahoo search before," he said. "This is not a first-time deal."
Yahoo on the Ropes
Once the most dominant player on the Internet, Yahoo's influence has steadily waned over the past several years as a result of competition from Google and Microsoft. This spring, the company went through a tumultuous internal battle involving its board of directors after Microsoft made an unsolicited bid for Yahoo.
"Yahoo's on the ropes right now," Gillis said. "A deal like this would give Yahoo the cash it needs to reinvent itself."
Yahoo has already taken steps to do so. Earlier this month, the company announced a new technology platform that makes it more efficient for advertisers to post display ads on the Internet. Display ads comprise a much larger piece of the overall online ad market than search ads.
A Google-Yahoo alliance would give the two companies a dominant position in the online advertising market, Gillis acknowledged, but he questioned the wisdom of letting Yahoo's share continue to deteriorate.
"It's true that there's still a lack of other major players," he said, "but having a weak Yahoo become weaker -- does that help anything?"
Youth and the Web: The Political Campaign Game-Changer September 30, 2008
Candidates running for office this fall -- presidential or otherwise -- are faced with the difficult task of effectively marketing their messages through a fragmented landscape of online and traditional media. Younger voters are more likely to get their information online, but managing an effective Web marketing campaign is a difficult balancing act, writes Pangea Media CEO Seth Lieberman.
Related Stories
Yahoo Gears Display Ad Engine to Home In on Targets September 25, 2008
Yahoo has overhauled its display advertising engine, making it easier for users to target specific demographics with their messages. The company is maneuvering for the lead position in the segment, which could be even more lucrative than search advertising. The 800 newspapers partnering with Yahoo in the effort are hoping it will open a new channel for much-needed revenue.
Google, GE to Groom Grid for Electric Cars September 18, 2008
A future full of electric cars will have the U.S. less dependent on foreign oil, but it'll be more dependent than ever on its own domestic energy infrastructure. That's just one of the issues Google and GE have addressed with a new partnership in which both companies will attempt to tackle the technological and political challenges of smartening up the nationwide power grid.
Related News Alerts
More by Jeff Meisner
AT&T Launches Netbook-With-Service Experiment April 02, 2009
AT&T is plugging a new plan in Atlanta and Philadelphia, offering netbook computers for as little as $50 to consumers who sign up for a monthly broadband access plan at $60 a month or more. The deal might be especially attractive to mobile workers in the healthcare and financial services sectors, who need more than a smartphone to conduct their business.
Microsoft Offers Small-Biz Server Value Meal April 01, 2009
Microsoft has unveiled a budget-minded server package for small businesses, providing the hardware, software and administrative services necessary to run their operations in much the same way that larger enterprises do. The offering could provide some competition for cloud-based hosted services, which have been gaining traction.
New Google VC Fund on the Prowl for Great Ideas March 31, 2009
Google is pouring some of its millions into a new venture fund on the lookout for innovations, particularly in the consumer Internet, software, clean tech, biotech and healthcare arenas. The move may seem counterintuitive during a recession, but Google argues that "great ideas come when they will."
Headline Feeds
between search engine giants Google (Nasdaq: GOOG) and Yahoo (Nasdaq: YHOO).
Talkback: 
