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9/16/2008
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EU To Examine Google-Yahoo Ad Deal

The European Competition Commission has joined the growing number of groups concerned that the arrangement will hinder competition in online advertising.

Compounding its stateside antitrust woes, Google now has to worry about European regulatory scrutiny of its advertising deal with Yahoo.

According to the BBC, the EU Competition Commission has said it will begin an inquiry into Google's plan to run ads on Yahoo. Depending on what the EU's regulators find, the commission's inquiry could become a formal investigation.

Under the deal announced by Google and Yahoo in June, Yahoo has the option to display Google ads on Yahoo Search results pages and on the pages of its publishing partners in the United States and Canada.

"This agreement will preserve the competitive and dynamic online advertising space," said Google CEO Eric Schmidt at the time.

In July, the U.S. Department of Justice opened a formal investigation into the deal. While such inquiries are common for major business deals, The Washington Post at the time reported that the DoJ was giving the deal extra scrutiny.

That appeared to be confirmed by news last week that the DoJ had discreetly hired well-known litigator Sandy Litvack, former general counsel for Walt Disney and former assistant attorney general in charge of the antitrust division of the Department of Justice, possibly to lead an effort to block the deal.

In an e-mailed statement last week, a Google spokesperson said the company had delayed the deal to give the DoJ time to understand it and that Google continues to cooperate with the DoJ. "While there has been a lot of speculation about this agreement's potential impact on advertisers or ad prices, we think it would be premature for regulators to halt the agreement before we implement it and everyone can judge the actual impact," the statement said. "We are confident that the arrangement is beneficial to competition, but we are not going to discuss the details of the regulatory process."

A growing number of groups have come to the conclusion that the arrangement will hinder competition. The World Association of Newspapers on Monday asked regulators to block the deal. "The Google-Yahoo deal would spell the end of this competition, thereby further weakening the viability and economic independence of the world's newspapers," the organization said in a statement.

And on September 7, the Association of National Advertisers sent a letter to the DoJ arguing against the Google-Yahoo deal.

In late August, Canada's Competition Bureau also announced plans to review the deal.

In July, Microsoft senior VP and general counsel Brad Smith testified before Congress that the Google-Yahoo deal would give Google about 90% of all search ads. "Never before in the history of advertising has one company been in the position to control prices on up to 90% of advertising in a single medium," he said. "Not in television, not in radio, not in publishing. It should not happen on the Internet."

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