Google-Yahoo! deal to be probed by EU

by Dan Leahul, Brand Republic 16-Sep-08, 09:10

LONDON - Google and Yahoo!'s search advertising alliance is to be reviewed by the European Union competition regulators adding to existing scrutiny from the US antitrust authorities.

The partnership between Google and Yahoo! sees the two search engine giants combine their search advertising systems, which will allow Google to sell advertising on Yahoo! in return for a share of the profits.

Since it was announced in June, the partnership has been under a barrage of criticism.

Yahoo! embarked on the tie-up with Google after chief executive Jerry Yang blocked a takeover bid from Microsoft earlier this year. The partnership could mean millions of dollars in revenue for Yahoo! and strengthen Google's dominance over the search engine advertising market.

Jonathan Todd, a spokesman for the European Competition Commission, told Reuters: "In mid-July, we decided to open a preliminary investigation on our own initiative into potential effects of the Google-Yahoo! agreement on competition in the European Economic Area market."

The probe will be similar to one initiated by the US Department of Justice last week, in which a heavyweight antitrust lawyer, Sandy Litvack, was brought in to oversee proceedings.

Although both corporations said that the partnership would only affect those in the US and Canada, many European media heavyweights have been weighing in on the deal, saying it would have a negative impact on advertising revenues around the globe.

The World Association of Newspapers (WAN) yesterday added its voice to calls for regulators to intervene. WAN is an international organization representing 77 national newspaper associations and over 18,000 newspapers worldwide.

In a statement WAN president Gavin O'Reilly said the competition that currently exists between Google and Yahoo! is "absolutely essential" to ensuring competitive returns for online advertising revenues of its member titles.

The concerns echo those made last week by an association representing some of the biggest consumer advertisers in the US, the National Association of Advertisers (ANA).

The ANA, which include huge corporations like Procter & Gamble and General Motors, said that the Google-Yahoo! partnership would result in a 90% stranglehold of the search advertising market, severely diminishing competition.