Yahoo and Google: Antitrust?

By Reuters - Print this article Print

Yahoo speaks its mind to a Senate Judiciary Committee that it doesn't wish to be bought up by Microsoft.

Yahoo shares were down 3.7 percent to $21.73 in Tuesday afternoon trading on the Nasdaq. Microsoft shares were up 4.3 percent to $26.22, Google shares were down 1.7 percent to $512.70.

Google and Yahoo have refrained from consummating the revenue-sharing deal while they wait for an opinion from antitrust authorities at the Justice Department.

At Tuesday's hearing, some lawmakers raised antitrust and privacy concerns but did not say whether they would be support or oppose the deal.

"The Google agreement with Yahoo may relate only to text advertisements, but if it stifles competition in this market, it will quickly spill into emerging online ad markets such as delivery to mobile devices," said Democratic Sen. Patrick Leahy of Vermont, the chairman of the Judiciary Committee.

The deal has raised antitrust concerns since Google by far dominates search advertising while Yahoo is a weak number two. Microsoft is in third place.

Testifying shortly after Callahan, Microsoft General Counsel Brad Smith pressed the antitrust issue. He told the committee the deal would reduce Yahoo's incentive to compete against Google, would push Yahoo's search advertising platform into a downward spiral and establish an illegal price floor.

"When it comes to the issues before this subcommittee, Google should not be allowed to achieve an outcome through an agreement that it would not be permitted to achieve otherwise," said Smith in his written testimony.

Callahan told the lawmakers those worries were misplaced. He said Yahoo would remain in the search business and "do everything we can to grow our share and also strengthen our competitiveness in search and search advertising."

(Reporting by Diane Bartz; Editing by Tim Dobbyn and Derek Caney)

This article was originally published on 2008-07-15
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