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. identicon
    reed, 5 Nov 2008 @ 4:16pm

    Re: Re: This Stinks

    Microsoft has a monopoly on the desktop market.

    How important do you think desktop computers are nowadays?

    Our society is so dependent on Microsoft it isn't funny, it is sad.

    Don't even mention Mac as a competitor because they are even more proprietary and monopolistic than Microsoft in their practices. The only thing they are missing is the market share.

    So what are these alternative desktops you are talking about? I am a big fan a Linux myself, but as long as Microsoft refuses to document how their operating system works we will never break completely free from their legacy.

    A solution like Wine could turn things around and allow Windows programs to run under any operating system, but they are still not quite there yet.

    Diversity is a sign of strength and we are extremely weak in this area. No wonder why we have to fight $18 billion dollars in spam a year. This is what happens when you rely on one operating system to heavily.

    If Microsoft had to pay for their poor programming and the results they wouldn't be making half the profit they are.

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