Many people have argued that Google is becoming more like Microsoft, especially in how dominant the company is in its core market: search. That dominance has raised the specter of the “M-Word” (monopoly) in some quarters. In particular it has most recently arisen in the context of the pending Google-Yahoo paid search deal. Both companies submitted the deal to voluntary review at the US Justice Department. And both Google and Yahoo argue that anti-trust considerations don’t apply because there’s no M&A deal and Google can’t control SEM prices.
The expectation has been that review of the deal would be relatively straightforward and that it would be approved. However, yesterday two things happened that make the outlook for the paid search alliance a bit more murky.
First, the Association of National Advertisers issued a non-public letter to the Justice Department arguing against the Google-Yahoo deal. But more significantly, as the Wall Street Journal reports:
The Justice Department has quietly hired one of the nation’s best-known litigators, former Walt Disney Co. vice chairman Sanford Litvack, for a possible antitrust challenge to Google Inc.’s growing power in advertising.
Mr. Litvack’s hiring is the strongest signal yet that the U.S. is preparing to take court action against Google and its search-advertising deal with Yahoo Inc. The two companies combined would account for more than 80% of U.S. online-search ads.
Google shares tumbled 5.5%, or $24.30, to $419.95 in 4 p.m. trading on the Nasdaq Stock Market, while Yahoo shares were up 18 cents to $18.26.
While there’s no guarantee that an action against Google will take place, this development suggests that the government’s review is anything but perfunctory.
Related Topics: Google: Critics | Legal: General
Like This Story? Please Share!
Like Our Site? Follow Us!
Follow @sengineland