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
    mike42 (profile), 5 Nov 2008 @ 4:07pm

    Re: Re: This Stinks

    Microsoft owns 90% of the desktops in use today. That sounds pretty monopolistic to most people, regardless of how they got there.

    I personally agree with you, it's really just less suck than the other OS's.

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