The NY Times covers the issue of whether Google’s potential paid search deal with Yahoo can survive anti-trust scrutiny. The bottom line involves analysis of how the deal might impact the marketplace and whether it would reduce competition and lead to higher prices for search marketers.
Google steadfastly says no, argues that in an auction it cannot control pricing and makes analogies to other industries and companies that both cooperate and compete. Anti-trust experts quoted in the piece, however, speculate about whether the deal might potentially weaken Yahoo over the long term and minimize competition in paid search. The fear is that Yahoo gradually just turns over its paid search platform and inventory to Google monetization, diminishing its ability to serve as a credible alternative and competitor in the paid search marketplace, longer term.
Some SEMs have expressed enthusiasm for this proposition because of perceived efficiency. Indeed, monopolies can be efficient but concentrating too much power in a single entity tends to distort the marketplace and eventually corrupt the monopoly entity itself.