Justice Department May Have Just Killed Yahoo; Google Drops Partnership

from the you-wanted-less-competition,-you-got-it dept

Well, apparently even the greatly scaled back version of their ad partnership wasn't enough to appease a Justice Department intent on suing Google for antitrust no matter what the real issues are. Google had previously threatened to kill the deal if the Justice Department didn't ease up on its position, so it really shouldn't come as a surprise to anyone that Google has now dropped out of the deal entirely.

The government is still insisting that it would have represented a monopoly, as around 90% of the "relevant market" would have been managed by one company. First of all, they were only looking at the search ad market, which is hardly the relevant market. Advertising budgets pay for much more than search ads, and if search ads really became more expensive, it would only open up opportunities for alternative means of advertising. Besides, there was still little to no indication that any such deal would increase advertising fees. Given Google's auction based system, and the fact that this would increase inventory, there's plenty of reason to believe it would actually decrease advertising costs.

In the end, killing off this deal may represent a pretty big blow to Yahoo's chances of moving forward as an independent concern. The company was very much relying on the Google deal to stabilize its financial condition. Without that, Yahoo is in trouble -- meaning there's probably a good chance that Microsoft takes another look at acquiring the company for much, much less than before. That means, Yahoo as we know it, disappears. Considering the Justice Department wanted more competition rather than less, it's unfortunate that it's misguided decision is effectively killing off one of the competitors.
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Filed Under: antitrust, justice department
Companies: google, yahoo

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  1. icon
    Darren Tomlyn (profile), 5 Nov 2008 @ 1:31pm

    Short-term thinking...

    And here we have yet another case of short-term thinking (on both sides) making things far worse than they needed to be...

    I don't know why, but it seems like a lot of companies and organizations on both sides of the Atlantic atm seem to be suffering from short-sightedness, and it's a bit frustrating. Especially when you yourself suffer for it.

    I'd ask if there's anyone out there these days that does actually think in the long-term, but we've just had the best example of it in the U.S. Presidential Election from Barack Obama. If anyone out there can learn anything from this Election, then please learn that...

    (Bit of an OT rant, but I really feel a need to post this somewhere, sorry):

    (Unfortunately I've been hit by a case of short-term thinking aswell, by the people at hexus.net.

    I'm a potential customer - (am looking for a PC PSU and SATA DVDR - (my current PSU is too old for SATA, and is not powerful enough to run the new computer (M-B/CPU/Memory) I'm looking to buy early in the new year), right NOW - (TODAY!), with an eye on further purchases in the new year - (need to replace my DAW, which died)).

    I was originally planning to buy from cconline.com but thought I'd ask some more about which PSU to buy, so I visited hexus to ask - (since they, like me, are UK based), and found that they are affiliated with scan.co.uk and have a deal that if you make 20 posts on their forums, you get free P&P.

    So, you'd think that, since I was looking to buy the next day, (which I was very open about), it would be in THEIR interests to have me be able to make those 20 posts - (so long as they're not out-and-out spam!) - in order to buy through them, from scan, and not cconline, right?

    So when I created a thread in their general discussion area - (so it's out of the way, and not Off Topic) - (I created a thread for something I'd been hammering away at all yesterday morning (I had 51 of them at the time - have written more last night) - U.S. Election haiku - (it started on the TIME magazine Swampland blogs)) - I was open about the fact that I was going to make 10 quick posts containing my poetry - (it was all I needed to make to get the free P&P), and I thought they'd understand...

    How wrong can someone be? You'd have thought that getting 20 posts in their forums for free P&P would cause the world to end, based on their replies! Now, I'm a creative person - (I normally write music, not poetry) - and I don't like it when people tell me when I how I must do so.

    Needless to say, as far as I'm concerned, hexus.net no longer exists, and scan.co.uk has lost a customer. I even emailed them to let them know, since it's not their fault, though it is, unfortunately for them, their problem.

    Just another example of why being petty towards potential customers is not a good idea if you wish for them to become ACTUAL customers. Although the media companies like to do the same thing, they at least have a monopoly over certain products that almost allows them to get away with it. Consumer online computer hardware companies, however, most certainly DON'T.


    I'll leave you with an example of the poetry I was posting for my discount:

    Palin and McCain
    Blizzard snow and desert rain
    Failed in (Failing) their campaign


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