SiliconBeat

Confirming recent scuttlebutt, Google announced Wednesday that it was walking away from its advertising partnership with Yahoo. According to a press release from the U.S. Department of Justice, the agency had told the pair that it planned to file a suit to block the deal:

“Yahoo! Inc. and Google Inc. abandoned their advertising agreement after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the implementation of the agreement. The Department said that, if implemented, the agreement between these two companies accounting for 90 percent or more of each relevant market would likely harm competition in the markets for Internet search advertising and Internet search syndication.

“The companies’ decision to abandon their agreement eliminates the competitive concerns identified during our investigation and eliminates the need to file an enforcement action,” said Thomas O. Barnett, Assistant Attorney General in charge of the Department’s Antitrust Division. “The arrangement likely would have denied consumers the benefits of competition–lower prices, better service and greater innovation.”

As I wrote the other day, I think the notion that this deal raised anti-trust issues was wrongheaded. And I think Google and Yahoo could have won a court fight. The problem was that this would take time and money. And the deal didn’t really matter that much to Google from a financial perspective to invest all those resources in fighting to save it. Google was doing it, probably, just to thumb its nose at Microsoft and disrupt its bid for Yahoo.

For Yahoo, on the other hand, this is a body blow. Read the rest of this entry »

It’s become increasingly clear that the U.S. Department of Justice is building a case against the proposed ad deal between Google and Yahoo. And now there are rumblings that Google may walk away from the deal. Amid this speculation, there’s more talk that Yahoo and AOL are sniffing around each other again for some possible deal. If the Google deal collapses, Yahoo apparently feels it needs something to get its stock price going and buy it some time to implement its new “open” strategy.

All this hand wringing over the Google deal, however, has left me shaking my head.

Recall that Yahoo signed the deal with Google as a way to thwart the takeover bid by Microsoft. Not the greatest move in the world. But still, I don’t understand the firestorm of protest over it.

Here’s why: Read the rest of this entry »

Yesterday, representatives of the Holy Trinity of Search arrived on Capitol Hill: Google, Microsoft and Yahoo. They had been called upon to discuss the anti-trust implications of Yahoo’s search deal with Google. As would be expected, there was a lot of huffing and puffing on all sides. The big highlight according to the Merc’s man in D.C., Frank Davies, was when Microsoft general counsel Brad Smith claimed that Yahoo CEO Jerry Yang copped to the fact that the deal would violate anti-trust rules:

Yang “looked us in the eye,” Smith said, and told Microsoft executives, “The search market today is basically a bipolar market. On one pole there’s Google, and on the other pole there are Yahoo and Microsoft both competing with Google. If we do this deal with Google, Yahoo will become part of Google’s pole, and Microsoft would not be strong enough in this market to remain a pole of its own.”

That apparently had Yahoo’s folks spitting up their milk through their nose. But no matter. Because it’s an overly simplistic reading of anti-trust rules to assume that such a scenario would violate competitive rules. And that’s because anti-trust isn’t really measured in the way many of us assume. Read the rest of this entry »