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GOOGLE-YAHOO DEAL MAY END

Google might walk away from the planned advertisement deal between Google and Yahoo. The main motive of Google behind this deal was to separate Microsoft and Yahoo. As this deal was initiated during the Microsoft’s unsolicited bid for Yahoo.

The Association of National Advertisers had sent a letter to Justice Department opposing the Google Yahoo ad pact. As a result, antitrust regulators have hired high-powered attorney Sanford Litvack to lead its legal challenge to block the deal.

Prominent analysts have said that Google will not be in much loss if they shut this deal. According to Cowen analyst Jim Friedland, Google’s earning would only increase by 1% or 2% in the first 12 months due to the deal. Even Stifel Nicolaus analyst Blair Levin said “it would be risky…to proceed if Google is getting signals that the agency has serious concerns”. By this he means that Google should rather withdraw the plan rather than fight the justice department in court.

The advertisement arrangement between the two search engines states that Google can run its text ads next to Yahoo’s search results. thus, Yahoo would be paid by Google an unspecified search revenue. His deal was first planned in June when Microsoft was very keen to acquire Yahoo.

“The partnership will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising,” This was written by association of national advertisers in a letter to the justice department.

In return Google replied indirectly to ANA stating that “While there has been a lot of speculation about this agreement’s potential impact on advertisers or ad prices, we think it would be premature for regulators to halt the agreement before we implement it and everyone can judge the actual impact.”

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