Google And Yahoo! Deal Criticised

Microsoft has criticised the search advertising deal between Google and Yahoo! to a US congressional committee, which has been set up to look at how the partnership would affect the future of online advertising.

Microsoft argued that the deal would allow Google and Yahoo! to control 90% of the North American search ad market, adding that no-one in the industry wants the market to tip further towards Google.

Brad Smith, Microsoft’s senior vice-president and general counsel, told the committee: “Never before in the history of advertising has one company been in a position to control prices on up to 90% of advertising in a single medium.”

Herb Kohl, chairman of the committee, added: “[Congress needs to explore] whether this agreement will reduce Yahoo to nothing more than the newest satellite in the Google orbit.”

However, Google and Yahoo! have defended the 10-year deal, saying the venture will make Yahoo! more competitive with Microsoft and others because they will have more revenue.

Yahoo! is expecting to generate between $250 million (£126 million) and $450 million (£227 million) from the deal within the first three years.

David Drummond, Google’s chief legal officer, said: “The whole system becomes more effecient: people see and click on more ads that are useful to them … and advertisers get more potentially interested customers.”

Commenting on Microsofts failed attempt to strike its own deal with the search engine, Yahoo’s executive vice president, Michael Callahan, said: “Our priority is to build value for stockholders. What we will not do, however, is allow our business to be dismantled or sold off piecemeal on terms that would be disadvantageous to Yahoo stockholders and to the market as a whole.”

Yahoo!: 020 7808 4200 www.yahoo.co.uk Google: 020 7031 3000 www.google.co.uk/ Microsoft: 0870 60 10 100 www.microsoft.com/uk