Google Beefs Up Lobbying Efforts In DC And Among Advertisers To Support Paid Search Deal With Yahoo

An extensive piece in the NY Times from Sunday discusses the behind-the-scenes drama of the Google-Yahoo paid search deal and how Microsoft has worked to derail it. Consumer and advertiser groups have also expressed objections to the potential arrangement. Entitled “Google Learns Lessons in the Ways of Washington,” it further describes how the Mountain View company is quickly upgrading its lobbying presence and efforts in the US capital.

The following paragraph captures the essence of the article:

Google is now extending its reach in Washington in ways big and small. Over the last few months, it has hired new outside counsel, former members of both the Clinton and current Bush administrations. It has also created Google policy fellowships, placing students in organizations like the Cato Institute that frequently research policies important to Google. And it sent executives, including Mr. Schmidt, to the Democratic and Republican national conventions to network with bureaucrats and politicians.

Simultaneously Google appears to be lobbying some of its advertisers to speak out in support of the deal. TechCrunch quotes an AdWords advertiser who was called by an attorney representing Google looking for public testimonials supporting the Google-Yahoo paid search deal:

I received a voicemail from an attorney representing Google yesterday so of course I called back (voicemail attached). We spend about 100K a month on AdWords so we’d apparently been targeted because of that. He was looking for large advertisers who use both Google and Yahoo (we do) who would be willing to provide public testimonials in support of outsourcing Yahoo’s search ads to Google.

Yahoo reports earnings at 5pm Eastern tomorrow and it’s widely anticipated that the company will feel some pain from weakness in the online display ad sector. Yahoo arguably needs the Google deal to monetize more of its queries and Google clearly wants it for access to a major source of new search traffic.

There’s widespread speculation that the US Justice Department is preparing an anti-trust case against Google amid growing concern about Google’s dominance of paid search, fueled by  objections to a Google-Yahoo deal by a number of groups and organizations.

Google and Yahoo previously said that they would implement the deal regardless of DOJ approval but are giving the government “more time” to review the arrangment and its potential impact on the market.