September 16th, 2008

EU scrutinizes Google-Yahoo deal

By Richard Koman

More trouble for Google’s advertising deal with Yahoo: The European Union is launching an antitrust “inquiry” into the deal, even though it only applies to Yahoo’s search in North America. If the inquiry proves fruitful, the EU Competition Commission could escalate it into an “investigation.”

How is this even the EU’s concern? The commission says it is because the companies do business in Europe, according to the BBC. The U.S. Justice Department is also investigating.

But the EU investigation could prove more troubling that the Justice Dept’s work since “EU antitrust regulations have traditionally proven more strict than American ones,” the BBC notes.

The companies were hoping to avoid EU scrutiny by limiting the deal to the US and Canada but he who lives by the Internet dies by the Internet.

“It’s not the same as if this happened with two shoe manufacturers,” Juan Delgado, a research fellow at Bruegel, said. “In this case, you’re talking about advertising on the Internet, and it’s difficult to assess who’s going to be affected.”

Meanwhile, the World Association of Newspapers issued a scathing statement opposing the deal:

[T]he deal will force newspapers to become even more dependent on Google than they are today. By handing Google control of up to 90% of paid search and content advertising, Google will exert tremendous power over both newspapers’ ability to reach readers and their ability to generate online advertising revenue. Perhaps never in the history of newspaper publishing has a single, commercial entity threatened to exert this much control over the destiny of the press.

While newspapers rely on Google for a significant portion of their online advertising revenues, we rely even more on the robustness of Google’s competitors to place constraints on its power. The Google-Yahoo deal would spell the end of this competition, thereby further weakening the viability and economic independence of the world’s newspapers.

(As a law school graduate and technology writer, Richard Koman brings a unique perspective to the blog's intersection of law, government and technology. See his full profile and disclosure of his industry affiliations.)