The Google-Yahoo ad deal gained support in the form of a letter (PDF) from several of California’s congressional representatives asking that the Department Of Justice not to block the proposed arrangement.
Led by Google and Yahoo’s "hometown" representative, Democrat Anna Eshoo from Palo Alto, the short letter signed by 11 US House Of Representative legislators so far reads much like it was written by Google and Yahoo to be posted on their new fact site about the deal.
The letter keeps repeating the Google-Yahoo mantra of how this is a non-exclusive deal (and thus, nothing to fear or regulate) and how such agreements are commonplace:
We are deeply concerned that the Department of Justice (DOJ) may be considering a preemptive lawsuit to block Yahoo’s non-exclusive online advertising agreement with Google. If such action were taken, we believe such an unprecedented suit could detrimentally affect the online adverting marketing and electronic commerce…
To our knowledge the DOJ has never before taken preemptive action against a non-exclusive contractual agreement of this type. Similar agreements are commonplace in many industries and standard among Internet companies. In fact, Microsoft had a similar agreement with Yahoo! and Google has similar arrangements with tens of thousands of companies.
Well, not quite. Yes, competitors on the internet have also often had "coopetition" agreements with each other. But no, we’ve never had the number one search player get this type of reach into the number two player’s ad inventory. The closest I can recall this happening is when GoTo (later Overture and then Yahoo Search Marketing) managed to get agreements for paid search distribution for every major search engine but Google.
Hey, that’s proof that competition does work, right? After all, GoTo got beat by Google, in the end. Well, GoTo also wasn’t running a popular consumer-facing site of its own that provided the majority of its search traffic. So, the two situations aren’t directly comparable.
Still, what really gets me in this letter (and I’m still generally favorable about the deal) is the idea that Google has arrangements with tens of thousands of other companies that are just like this one. No — people using a self-serve system to carry Google’s ads on small sites that have little traffic is entirely different in scope, scale and possible concern than the Google-Yahoo deal.
The letter goes on:
We believe that robust competition serves the public interest but ff the DOJ blocks this agreement we fear that the threat of additional scrutiny may chill future agreements. The competitive and disruptive nature of the Internet makes it extraordinarily difficult for any company to dominate. The rapid growth of the market and the increased potential in this space invites more and more competition. However, this growth and innovation could be stifled if the DOJ blocks this arrangement.
We urge the department to carefully assess the serious consequences of a challenge to this non-exclusive commercial arrangement and the precedent any action by the DOJ would establish.
Despite the disruptive nature of the internet, Google has seemed to dominate quite nicely, thank you very much. But still, I can agree with some of the concern raised. Will Google now have to wonder about each and every deal, whether it is sizable enough to push it over a threshold? If Google-Yahoo doesn’t happen, and Google grows anyway, will it have to divest itself of partnerships to stay south of some magic share figure that keeps regulators happy?
For more about the deal and some of the complicated issues it raises about competition, see also my recent posts: