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8/25/2008
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Canada To Review Yahoo-Google Ad Deal, Reports Say

Canadian antitrust authorities will look at whether the pact violates the country's competition rules.

Canadian regulators will scrutinize Yahoo's advertising deal with Google, according to media reports.

Bloomberg News reported this week that a senior competition law officer from Canada's Competition Bureau said that the agreement is significant and Canadian authorities will review it. Yahoo did not immediately comment.

Google and Yahoo announced an advertising agreement in June, after Yahoo rejected Microsoft's acquisition bid. The plan would allow Google to run ads with Yahoo's search results for four years, with two three-year extensions. The companies hope to launch the plan this fall.

Yahoo CEO Jerry Yang has said that the deal would not eliminate competition and it could draw $800 million in annual revenue.

Google representatives have said the agreement would promote competition and they compared it to auto manufacturers trading technology while continuing to compete with one another. The company insists that the arrangement would not increase its search traffic.

Microsoft representatives have said that Google has gained market dominance, that an agreement between the two companies would affect about 90% of all U.S. search ads, and that the deal would create a monopoly in search advertising.

According to ComScore, Google holds 61.9% of the U.S. search market, while Yahoo holds 20.5% and Microsoft accounts for only 8.9%.

The U.S. Department of Justice is reviewing the proposal and members of Congress have held hearings on the matter. Vermont Sen. Patrick Leahy said the agreement would allow one company to collect extensive personal information from Internet users. Other members of Congress and critics echoed Microsoft's complaints that the deal could hinder competition.

Canada's Internet search and online ad markets are similar to those in the United States, but Microsoft holds a greater share of the search market there, an analyst told Bloomberg.

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