JagsLive writes "Was the Yahoo/Google deal a ploy to weaken Yahoo ? : Sen. Herb Kohl (D — Wisc.) chairman of the Senate Antitrust Committee
With the DOJ expressing skepticism over Yahoo's agreement to sell search ad space to its biggest competitor, a letter from a key US senator urging action could be preaching to the choir. What's interesting is that senator's theory.
In a letter to the Justice Department's antitrust chief yesterday, Sen. Herb Kohl (D — Wisc.), chairman of the Senate Antitrust Committee, advised the Dept. to maintain a close watch over Google and Yahoo as they initiate their search advertising deal, for two reasons: The first is something discussed quite often, that the deal could be used to drive up the price of contextual search advertising.
But the second is something that has been mentioned, but not fully explored: the notion that Google made the deal in bad faith, as an anti-competitive measure to maintain Yahoo's subordinate position in the marketplace.
"Many interested parties are also apprehensive that if the transaction is consummated, Yahoo will have less incentive to compete against Google, as it will rely upon its main competitor for a significant increase in its revenue," reads Sen. Kohl's letter to Assistant Attorney General Thomas Barnett. "Therefore, critics contend that an advertiser will have an incentive to bypass Yahoo entirely and only bid for Google advertisements since an advertisement purchased with Google could be placed on both Yahoo and Google's search result pages."
Furthermore, Kohl goes on, as Yahoo receives more and more revenue from Google, it will only gain further incentive to give Google better placement. That could water down the value of Yahoo pages for other advertisers, in a situation that eventually leads to Yahoo never retaining a position as a major player in search advertising.
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