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Which is worse Microsoft-Yahoo or Google-Yahoo; the question sounds silly, but its what regulators may have to decide

After being one of the most outspoken critics of the possible Microsoft-Yahoo merger, Google is now in the awkward position of wrestling with regulation concerns about its own potential deal with Yahoo.  While the Yahoo-Google deal is not an outright merger, it involves the pair heavily interacting and vests much advertising interest with Yahoo. 

For Yahoo, it’s a desperate attempt to ward of Microsoft, which has been circling it like a shark.  For Google, it’s a victory in advertising in some ways at the expense of its once rival, and another chance to one-up competitor Microsoft.

However, all is not honky dory with Yahoo and Google, as U.S. Justice Department has been questioning the pair about possible anticompetitive ramifications of their young deal.  The questions come as Yahoo completed its first two-week test of using Google's ad-sale system, with ads placed next to Yahoo search results.  Even 3 or 4 years ago, such a development would be considered laughable, but it’s just one more example of the extent of Google's ever increasing online presence and Yahoo's struggles.

Will the merger survive regulator critique?  Google believes strongly that it will.  After initially being wary of an advertising deal, the giant is now very interested in it.  Google's leadership says that the deal will likely satisfy regulators in that it is "non-exclusive" and is not a merger, merely a business partnership.  The source also pointed out that Yahoo has other similar existing partnerships with Time Warner Inc's AOL and IAC/InterActiveCorp, though the Google partnership may eventually be Yahoo's largest.

Google still insists that while its deal is not anticompetitive or monopolistic, a Microsoft-Yahoo merger would be.  Google argues that such a merger would essentially create monopolies or overly dominant shares in Web mail to instant messaging, among other sectors.  Though they do not say it, it seems that Google believes that its ad deal is the lesser of two evils in terms of effect on competition.

Fortunately for Google's hopes, Yahoo has been very enthusiastic about the deal; in fact it was Yahoo who initiated it in the first place.  Yahoo and Google both have been working together to satisfy the Justice Department's questions.

Some critics have been crying foul over the fact that Google's AdSense has not been added to the second largest search engine, giving it a very large market share in the search engine industry, a primary source of web traffic.  According to ratings company Hitwise, Google now has 80 percent of the search engine market for use with its advertising.

Of course Google's dominance is not quite as complete as those numbers indicate.  Its real percentage is probably somewhere between 60-70 percent, as in the initial test only 3 percent of U.S. Yahoo searches carried Google ads.  Yahoo is not disclosing the results of the test, which might provide intriguing details into how lucrative the new deal is for Google.  Yahoo President Susan Decker on Tuesday said that speculation on its long term plans with Google was "premature".

Google is still looking to negotiate a more permanent relationship with Yahoo, which will likely be influenced by regulatory feedback.  One major critic of such a relationship is Microsoft, for obvious reasons.  Microsoft blasted such a deal saying it would make the web search market far less competitive.

Aaron Edlin, who teaches antitrust law at the University of California at Berkeley, says the deal is troublesome, but may slip by regulators.  He states, "The general rule would be that if the arrangement substantially limits competition in some aspect of their business, that would be problematic.  Collaboration that comes short of merger is much more apt to pass muster before antitrust authorities."

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Pot. Kettle. Black.
By therealnickdanger on 4/28/2008 10:51:26 AM , Rating: 3
Where were you during the Great Yahoo Buyout 2008?

RE: Pot. Kettle. Black.
By bighairycamel on 4/28/2008 11:09:24 AM , Rating: 1
Where were you during the Great Yahoo Buyout 2008?

That sounds like another crappy Toby Keith song.

RE: Pot. Kettle. Black.
By FITCamaro on 4/28/2008 12:10:37 PM , Rating: 3
Where were you....when they built the ladder to heaven....

RE: Pot. Kettle. Black.
By Etsp on 4/28/2008 12:34:44 PM , Rating: 2
*gets all teary-eyed*

RE: Pot. Kettle. Black.
By StevoLincolnite on 4/28/2008 6:15:06 PM , Rating: 3
Damn Onions....

So what exactly are they trying to do?
By daftrok on 4/28/2008 10:54:12 AM , Rating: 2
If it isn't a merger, then what exactly is going to happen? Will Gmail get Yahoo Mail features? Will ads be swapped here and there? What are the details about this?

RE: So what exactly are they trying to do?
By JustTom on 4/28/2008 11:01:03 AM , Rating: 2
This is Yahoo arranging to use Google's AdSense. It is not even remotely a merger.

Just for historical purposes Yahoo has used Google technology before. Up till early 2004 Yahoo used Google search technology.

By masher2 on 4/28/2008 12:04:13 PM , Rating: 3
It doesn't have to be a technical merger; if two companies have business arrangements in such a manner that they are cooperating within a market more than competing, then they can be treated as a single entity for Antitrust considerations.

By rupaniii on 4/28/2008 4:49:48 PM , Rating: 3

By PWNettle on 4/28/2008 6:04:08 PM , Rating: 2
Eh, for everyone it's "boohoo" - yet more crappy google ads to avoid.

By omnicronx on 4/28/2008 11:49:19 AM , Rating: 2
What is the point here? If its not a merger, than are we really suppose to believe that mere add sharing is going to pull yahoo from the water? Whats to stop MS from merely continuing in their pursuit of a takeover, probably still at a lower price than the original offer. I also really doubt Google has enough capital to pursue such a takeover for themselves.

Google obviously knows this is a deal for them, as they keep yahoos growth at bay, and stop Microsoft from getting enough market share to give Google some real competition. I know its hard to say, but I think in the long run an MS-yahoo merger will benefit the consumers much more than letting Google hold a huge share.

Google pretends to be the nice, opposite side of the Microsoft spectrum but I just do not buy it one bit, they are just like every other greedy corporation out there, they want to make money. Google is just much better at masking their true intentions.

Honky dory?
By C'DaleRider on 4/28/2008 3:36:30 PM , Rating: 2
However, all is not honky dory with Yahoo and Google....

It's hunky-dory , not honky dory. Sheesh.........

work safe
By dome1234 on 4/28/2008 6:33:40 PM , Rating: 2
my reaction can be summarised in the following gif

Google-Yahoo deal?
By InternetGeek on 4/28/2008 6:50:17 PM , Rating: 2
When did this happen? I thought Microsoft would start to buy Yahoo this week?

Agreed with Google
By wordsworm on 4/28/2008 9:28:03 PM , Rating: 2
Though they do not say it, it seems that Google believes that its ad deal is the lesser of two evils in terms of effect on competition.

I'm not a big fan of Google. However, I have to say I was thinking the same thing. It is not to the Internet's benefit to have MS owning the Internet. Losing a little competition in the world of ads is a lesser evil than losing one of the world's best web portals to MS.

Google - Microsoft
By Pottervilla on 4/28/2008 1:25:45 PM , Rating: 1
If that sub-heading is correct, two of the largest IT companies are talking about merging? We might even get a decent company out of the deal, since Google can-do-no-wrong and Microsoft what-have-they-done-now would even each other out. I think the sub-heading needs to be changed. :)

Let em merge
By PAPutzback on 4/28/08, Rating: -1
RE: Let em merge
By EntreHoras on 4/28/2008 11:10:15 AM , Rating: 2
Probably, an 8 core CPU will be the standard when Windows 7 arrives.

RE: Let em merge
By bighairycamel on 4/28/2008 11:12:52 AM , Rating: 2
That's really stupid.

That's like saying a huge company like Sony should only focus on consumer electronics and should dump its movie or music porductions... or like saying Bayer should focus on pharma and dump it's medical diagnostics business.

RE: Let em merge
By afkrotch on 4/28/2008 1:43:32 PM , Rating: 2
I'm gonna have to agree with bighairycamel on this one. Microsoft makes what? OS, other software, search engine, online mail, Zune, 360, keyboards, mice, games, etc. They have more than enough personnel to work on different products.

Might as well have Samsung stop producing LCD panels for majority of the market and only work on it's nand flash memory. Forget the TVs, mp3 players, cell phones, monitors, digicams, vid cams, computers, fridges, washing machines, stoves, copiers, fax machines, and so forth.

RE: Let em merge
By bigboxes on 4/28/2008 2:14:26 PM , Rating: 5
Actually, Sony should focus on their consumer electronics and dump their movie and music productions. Maybe then they'd offer products that were geared towards their consumers instead of their other business interests.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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