Corporate & Securities Law

Google Yahoo Deal Update

The Wall Street Journal offers an update on the settlement talks with DOJ over the Google-Yahoo deal, which includes some interesting details about possible concessions to get the deal through:

In the settlement talks with the government, both companies have discussed concessions. These include capping the volume of Google ads Yahoo would use, assurances that Yahoo would continue to compete in search ads, and a reporting mechanism to ensure compliance, people close to the talks said. U.S. officials hope to impose measures that will ensure that prices advertisers must pay don’t rise significantly after the deal … .

Reworking the deal to include a reporting mechanism, could require the companies to disclose more about the mechanics of their closely-guarded search-advertising technology than they want to. And caps on how many Google-sold ads Yahoo can display could limit Yahoo’s financial gains from the agreement.  Google’s critics, including Microsoft, have forcefully argued that online search advertising is too dynamic and complex to allow a settlement that could work and be effectively policed.  If the companies reach a settlement with regulators, its principles would likely be laid out in a consent decree that would be filed in court.

While that would allow the deal to proceed, it would also be a formal recognition of Google’s market power. That could constrain the Mountain View, Calif., company’s conduct in the future and might draw private antitrust suits from competitors or advertisers.  Even as senior Justice Department officials weigh the companies’ proposals to resolve antitrust issues, its trial staff continues to prepare a lawsuit to block the deal, according to lawyers and executives contacted by the government.  Justice Department officials already have deposed Google Chief Executive Eric Schmidt and other key figures in the case. Opponents, including Microsoft, have been provided documents and depositions for use in a possible lawsuit.  The companies have been cooperating with the Justice Department’s investigation and recently agreed to delay implementing the deal until at least Oct. 22 to give federal and state antitrust officials time to complete their separate investigations.

Full post as published by Truth on the Market on October 14, 2008 (boomark / email).