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11/3/2008
08:36 PM
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Google And Yahoo Limit Ad Deal To Appease Antitrust Regulators

The two companies now propose that their deal last two years rather than 10 and that Yahoo can only generate 25% of its search advertising revenue from the arrangement, reports say.

Google and Yahoo have reportedly agreed to limit the duration of their advertising deal and the amount of revenue the deal can generate.

According to reports in the New York Times and the Wall Street Journal, the two search companies are willing to reduce the scope of their agreement to appease antitrust regulators.

Citing unnamed persons with knowledge of the negotiations, the two newspapers report that two companies now propose that their deal last two years rather than 10 and that Yahoo can only generate 25% of its search advertising revenue from the arrangement.

Yahoo previously estimated that the deal could bring in as much as $800 million in revenue.

The advertising deal was supposed to begin in October, but the two companies delayed it to discuss the matter with the Department of Justice.

Since Google and Yahoo announced the deal in June, Microsoft, various advertising and publishing industry groups, and assorted politicians have come out against it.

In July, Brad Smith, SVP and general counsel at Microsoft presented prepared remarks at a congressional hearing that warned against the deal. "If permitted to proceed, we believe the Google/Yahoo agreement would effectively create a monopoly in search advertising -- to the extent one does not already exist -- and further reduce competition," he said.

In September, the Association of National Advertisers (ANA), an ad industry trade group representing the likes of Proctor & Gamble and Wal-Mart, on Thursday sent a letter to the U.S. Department of Justice arguing that the partnership Google and Yahoo will limit competition and advertiser choice, concentrate market power, and raise ad prices.

In October, U.S. Sen. Herb Kohl, (D-Wis) asked the Department of Justice to monitor the deal closely.

Google and Yahoo were not immediately available for comment. Google has consistently pointed out that the deal is non-exclusive and it has argued that the deal will promote competition and help consumers and advertisers.

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