Legal News

Next Up For Yahoo/Microsoft: An Antitrust Battle?

By Ashby Jones

So, Microsoft and Yahoo have convinced each other that a search and advertising between the companies is a good thing. But will they be able to convince antitrust regulators that the deal’s good for the marketplace? Possibly, but according to this WSJ story, it won’t happen without some considerable scrutiny by federal antitrust regulators and lawmakers.

Under the partnership deal, Microsoft’s technology will power Yahoo’s search engine, while Yahoo will sell ads on behalf of both companies. Click here for the WSJ story; here for the NYT story.

Shortly after the deal was announced, the two companies went on a full-court press, sending out separate letters to major ad agencies and advertisers. One was entitled “Benefits to Consumers, Customers and the Internet.”

But it’s just the opening gambit in what could be a long chess match. In the few hours after the deal was announced, Sen. Herb Kohl (D., Wis.), chairman of the Senate Judiciary Antitrust Committee, said it warrants “careful scrutiny” since it would combine “industry giants and direct competitors in Internet advertising and search markets.” He promised the deal would be “closely reviewed” by his committee.

A Federal Trade Commission spokesman declined to comment. A Justice Department spokeswoman said the agency is “aware of” the deal but declined to comment further.

Consumer groups weren’t as reticent, saying the deal could lead to less choice for consumers and more tracking of their online activities. “There are questions that must be answered regarding the collection and sharing of consumer data by the two companies,” said Jeff Chester, founder of the Center for Digital Democracy, a Washington nonprofit focused on privacy issues.

The companies are confident that the deal will be approved, Yahoo General Counsel Michael Callahan and Microsoft General Counsel Brad Smith said in a joint interview. They argued that the deal shouldn’t be seen as reducing the number of players in Internet search from three to two but rather as helping both companies better compete in online advertising with Google.

The combination is “really the only way to ensure” that there is “going to be a competitive long-term alternative to Google in paid search,” Callahan said.

Full post as published by Law Blog - WSJ.com on July 30, 2009 (boomark / email).