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Groups concerned about possible Google-Yahoo deal

An online advertising partnership between Yahoo Inc and Google Inc is facing opposition from consumer and civic groups that did not wait for an official deal announcement to voice their discontent.

Top Google executives said on Thursday they are interested in a partnership with their closest rival but didn’t indicate how close they were to an agreement.

A coalition of 16 civil rights and rural advocacy groups, including the Black Leadership Forum and the League of Rural Voters, on Friday urged federal regulators to investigate the potential combination.

The Black Leadership Forum is an umbrella group of 36 civil rights organizations, including the NAACP and the National Urban League.

LETTER

The groups argued in a letter to Assistant Attorney General Thomas Barnett, head of the Justice Department’s antitrust division, that the deal would give Google almost 90 percent of the search advertising market and strengthen its influence over Internet users’ access to information.

Separately, the Center for Digital Democracy (CDD), a consumer advocacy group, said it will push US regulators to block any deal and is already urging European consumer groups to raise concerns with EU officials. The EU generally takes a tougher approach on antitrust, fining Microsoft Corp US$1.39 billion for anticompetitive conduct earlier this year.

“You can’t allow Google to operate a portion of its leading competitor out of its back pocket,” said Jeffrey Chester, executive director of CDD.

MORE HURDLES

While previous attempts to block deals by both the CDD and civil rights organizations have proved unsuccessful, their opposition won’t be the only hurdle to a Google-Yahoo partnership.

The Justice Department has already made inquiries about an ad partnership test the two had for two weeks last month. And, Senator Herb Kohl, who chairs a subcommittee overseeing antitrust issues, said last month he would closely scrutinize any permanent deal.

Spokespeople from Yahoo and Google declined to comment on the groups’ letter. But Google executives said on Thursday they would seek to address regulators’ objections.

“If there were a deal [with Yahoo], we would anticipate structuring the deal to address the antitrust concerns that have been widely discussed,” said Google chairman Eric Schmidt.

Although Schmidt wouldn’t detail such a structure, analysts have speculated that it would operate the partnership as an auction-style system that would allow other rivals, including Microsoft, to show ads on Yahoo.
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