Google And Yahoo May End Deal; Not Worth An Antitrust Lawsuit

from the ouch-for-yahoo dept

With various politicians pushing the Justice Department to slam Google on antitrust charges (it's worth noting, of course, that Rep. Joe Barton, who seems to be leading the anti-Google charge, just so happens to have received an awful lot of campaign money from AT&T -- Google's arch nemesis), it appears that Google and Yahoo's attempt to broker a deal with the Justice Department may be falling through.

Reports are coming out that the two companies are ready to announce that they're walking away from their planned deal. This actually represents a bad end result for almost everyone involved. Yahoo will be hurt the most by this, and the last thing Yahoo needs right now is more trouble. For Google it's a loss, but not a huge loss. Microsoft comes out of it happy (and will gleefully watch Yahoo's stock continue to slide). It's still unclear what actual harm it would do to the marketplace to have Google running ads on Yahoo, but since when is politics about reason?


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  1.  
    identicon
    Twinrova, Oct 31st, 2008 @ 4:03am

    Yahoo is dead. Bury it and move on.

    "awful lot of campaign money from AT&T"
    This is a very good reason why Corporate America should be banned from contributing to campaigns, or at the very least, enact limit caps.

    All of a sudden, it seems "bailout" is the catchphrase of the day. Why should we care if Yahoo fails? It's obvious they couldn't compete, so where's the harm in letting them fade into the sunset?

    Google obviously built a better mousetrap and ran with it. Isn't this what competition's all about?

    Maybe Yahoo didn't give away enough free stuff. ;)

    Personally, letting Yahoo go helps make a better market. Instead of a hundred search engines, we now have 99. One less "choice" to contend with which also means....

    ...one less ad of a search engine to contend with.

     

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  2.  
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    Alpha Computer, Oct 31st, 2008 @ 6:09am

    The Strong Survive

    In the end it is about business. Businesses come and go. It's been hard on businesses lately. Some will not survive. This should be a wake up call for others. It's go time! Even when others don't play fair, you still have to keep pushing ahead.

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    Anonymous Coward, Oct 31st, 2008 @ 6:53am

    Re: Yahoo is dead. Bury it and move on.

    Yahoo is the go to portal/search engine for many countries outside the US. Brazil and Romania to name a few.

    I work in the hospitality business center industry. Believe me, Yahoo is more common than G-mail or Hotmail for an email service. Either that or the people that run into issues anyways are people that mainly use Yahoo....

     

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  4.  
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    Willton, Nov 2nd, 2008 @ 12:53pm

    Unclear?

    It's still unclear what actual harm it would do to the marketplace to have Google running ads on Yahoo

    What is so unclear about placing 89% of the online advertising market into one entity? Or do you just not see how that sort of thing is a bad thing? If so, then I guess you haven't been reading any of the comments to your posts about this deal.

    What I find unclear is how the public would benefit from such a merger. A deal that would create a high concentration of market power into one entity would appear to me to do little to help the public and have a good potential to hurt it.

    For someone who claims to be so opposed to monopolization, you have a funny way of showing it.

     

    reply to this | link to this | view in thread ]

  5.  
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    Mike (profile), Nov 2nd, 2008 @ 9:58pm

    Re: Unclear?

    What is so unclear about placing 89% of the online advertising market into one entity? Or do you just not see how that sort of thing is a bad thing? If so, then I guess you haven't been reading any of the comments to your posts about this deal.

    First of all, it is not 89% of the online advertising market, but nice try setting up a false definition of the market.

    Second, Google's system works as an open auction market place, meaning that Google isn't influencing that market either way.

    Third, the problem with an antitrust situation is when consumers are made worse off due to monopolistic actions. No one has shown where this is making anyone worse off.

    Fourth, the problem with a REAL monopoly situation is that the barriers to entry are large. That's not the case here. If Google does something bad, that just opens up an opportunity for someone else.

    What I find unclear is how the public would benefit from such a merger.

    I don't know... better ads? Cheaper advertising? Better deals? Easier to find what they want?

    Oh, the horror.

    A deal that would create a high concentration of market power into one entity would appear to me to do little to help the public and have a good potential to hurt it.

    Again, that's only true if you falsely define the market as you have.

    For someone who claims to be so opposed to monopolization, you have a funny way of showing it.

    I'm against real monopolies. Not bogus ones.

     

    reply to this | link to this | view in thread ]

  6.  
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    Nickg100, Nov 3rd, 2008 @ 6:53am

    Hmmmm,

    It seems to me like a very simple equation. More advertisers on 1 platform competing for less inventory means higher CPC prices.

    Over time more money to Google less to Yahoo! This means that Google benefit in the long run and Yahoo! lose out. The only reason Yahoo! took this decision is short term shareholder pressure.

    More choice, more competition is a good thing. Not less!

     

    reply to this | link to this | view in thread ]

  7.  
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    Willton, Nov 3rd, 2008 @ 11:21am

    Re: Re: Unclear?

    First of all, it is not 89% of the online advertising market, but nice try setting up a false definition of the market.

    Those were the numbers given by articles that you referenced and never refuted. I am just parroting them back to you.

    Second, Google's system works as an open auction market place, meaning that Google isn't influencing that market either way.

    Which doesn't mean that they can't necessarily do so. As one of your commentors pointed out, Google's system is not as simplistic as you posit:

    The idea that market forces will control advertising costs only makes sense if Google’s auctions match what most people think of as auctions – the sort of auctions you’d see if you went to your local auction house. They’re not. They’re complicated algorithms known mostly only to Google that, as has already been mentioned in these comments, can be changed at any time.

    http://www.techdirt.com/article.php?sid=20080908/0236212197#c128

    Third, the problem with an antitrust situation is when consumers are made worse off due to monopolistic actions. No one has shown where this is making anyone worse off.

    That's because it has not happened yet. The point of Section 7 of the Clayton Act is to look forward and predict whether such a deal has the potential to suppress competition.

    Fourth, the problem with a REAL monopoly situation is that the barriers to entry are large. That's not the case here. If Google does something bad, that just opens up an opportunity for someone else.

    Which assumes that there are no barriers to entry. I'm not so sure that's necessarily the case. What is needed in order to get into the internet advertising business?

    I don't know... better ads? Cheaper advertising? Better deals? Easier to find what they want?

    Oh, the horror.


    Really? You think that with one firm holding more of the cards that prices for advertising will drop? How? What makes this cost efficient for Google, the advertising provider? How does such a deal lower Google's costs of providing advertising space?

    A deal that would create a high concentration of market power into one entity would appear to me to do little to help the public and have a good potential to hurt it.

    Again, that's only true if you falsely define the market as you have.


    Then you're going to have to explain to me what is a reasonably interchangeable substitute for Google's internet advertising space.

    I'm against real monopolies. Not bogus ones.

    So what's the distinction?

     

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  8.  
    icon
    Mike (profile), Nov 3rd, 2008 @ 6:11pm

    Re: Re: Re: Unclear?

    Those were the numbers given by articles that you referenced and never refuted. I am just parroting them back to you.

    The numbers represent the *search* ad market. That's not the online advertising market by any stretch of the imagination. Considering that the relevant budgets are the ad budgets of companies, and if search ads become too expensive, they'll just move their money elsewhere, this hardly seems like an issue.

    We're talking about a small % of overall ad budgets.

    Which doesn't mean that they can't necessarily do so. As one of your commentors pointed out, Google's system is not as simplistic as you posit:

    Again, if it really becomes more expensive, companies will shift their ad budgets.

    That's because it has not happened yet. The point of Section 7 of the Clayton Act is to look forward and predict whether such a deal has the potential to suppress competition.

    Gov'ts are notoriously bad at predicting the future. I'd rather they didn't. If they must, then they should be required to show compelling evidence that there is a significant market failure at risk here. I've seen no such evidence.

    Which assumes that there are no barriers to entry. I'm not so sure that's necessarily the case. What is needed in order to get into the internet advertising business?

    Not much.

    Really? You think that with one firm holding more of the cards that prices for advertising will drop? How? What makes this cost efficient for Google, the advertising provider? How does such a deal lower Google's costs of providing advertising space?

    Google ends up with more economies of scale and more inventory, both of which tend to drive down prices.

    Then you're going to have to explain to me what is a reasonably interchangeable substitute for Google's internet advertising space.

    Just look at budget allocations for ad execs.

    So what's the distinction?

    A real monopoly is where there are extensive barriers to entry and lock-in. A bogus monopoly is one where people just point to the % of a market, rather than looking at the actual impact on the market.

     

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  9.  
    identicon
    ike, Nov 16th, 2008 @ 1:07am

    Which assumes that there are no barriers to entry. I'm not so sure that's necessarily the case. What is needed in order to get into the internet advertising business?

    Very little. I've seen a number of sites switch from externally managed ads to managing their own ads in order to better serve their customers. In effect, each of those sites became an internet advertising business. None of them seemed to have problems finding companies to sells ads to them.

     

    reply to this | link to this | view in thread ]


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