Tuesday, September 9, 2008

Google and Yahoo Partnership to Face Legal Challenge

Due to Yahoo and Google partnership in order to rule the online advertising market, the Justice Department has decided to hire an antitrust litigator to review evidence for what could become a legal challenge to the deal.

The Wall Street Journal reported that the attorney is Sanford Litvack, a former vice chairperson at Walt Disney Co. and chief of the Justice Department's antitrust division during the Carter administration.

Litvack is reviewing and examining all evidences that the department has gathered in what could become an antitrust case focused either on Google itself or on the search advertising partnership it announced with Yahoo in June. That deal was part of Yahoo's attempt to ward off a takeover attempt by Microsoft Corp. However, a Justice Department spokesperson declined to comment on the report.

Yahoo said in an e-mailed statement that they have been informed that the Justice Department, as they sometimes do, is seeking suggestion from an outside consultant. On the other hand, Blair Levin, a regulatory analyst at Stifel Nicolaus, said in a note to clients that the hiring of an outside lawyer such as Litvack is a "rare" move by the department that likely indicates a legal challenge against a firm or transaction.

The partnership between the two companies would permit Google to sell some of the ads displayed alongside search results on Yahoo's Web site. Google and Yahoo have insisted the deal would benefit advertisers and consumers. However, they have delayed it until early October to allow the Justice Department time to review it.

Google spokesperson Adam Kovacevich said, "We are confident that the arrangement is beneficial to competition, but we are not going to discuss the details of the regulatory process." On the other hand, Microsoft has strongly opposed the deal in testimony before Congress. A Microsoft spokesperson declined to comment.

On Sunday, a group of major advertisers said they had written the Justice Department in opposition to the deal, arguing it would give Yahoo and Google control of 90 percent of the online search advertising market. The group includes Procter & Gamble Co., Coca-Cola Co., and General Motors Corp.

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