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Google said it is postponing a planned online advertising tie-up
with Yahoo to allow more time for US anti-trust regulators to
consider the ramifications of the deal.
"When we announced our advertising
agreement with Yahoo! in June we agreed to delay its implementation
until October to give regulators time to look at the details,"
Google said in an email statement Friday.
"As we are still in conversation with the
Department of Justice we have agreed to a brief delay in
implementing the agreement while those discussions continue."
The proposed online advertising alliance could
be used to show that politicians and regulators blamed for letting
financial markets self-destruct are now better watching out for
people's economic interests.
"You hook up Google and Yahoo and you've
effectively created a lockout monopoly and regulators are not going
to have a good sense of humor," analyst Rob Enderle of Enderle
group told AFP.
"Right now, if you are a company making
lots of money you don't want to piss off any of the regulators. They
want to showcase that there is a new sheriff in town. Even oil
companies aren't safe."
Both California Internet titans have defended
the ad pact on Capitol Hill and in online statements.
Microsoft senior vice president and general
counsel Brad Smith has openly argued that the tie-up would crimp
competition and give Google "unprecedented" control of the
gateway to the Internet.
"If search is the gateway to the Internet,
and most believe that it is, this deal will put Google in a position
to own that gateway and the information that flows through it,"
Smith told a Senate Judiciary subcommittee in July.
The deal would put Google technology to work
targeting ads posted next to results on Yahoo search pages.
Smith said the tie-up would give Google "an
unprecedented level of control over advertising for search on the
Internet -- up to 90 percent potentially of all search ads."
The result, he said would be higher prices for
advertisers, and "put Google in control of the gateway to the
Internet ... raising significant privacy implications."
"That's just plain wrong," Yahoo
president Sue Decker wrote in an online posting titled "Myth
busting and the Yahoo-Google agreement."
"It's simply a contract that gives Yahoo
the right, but no obligation, to show Google AdSense ads on Yahoo's
own network."
Eleven California state political leaders are
urging US regulators not to interfere with the proposed tie-up
between Google and Yahoo.
The legislators, from the state where both the
Internet firms are based, signed a letter warning US Attorney
Michael Mukasey that Internet market growth and innovation
"could be stifled" by blocking the Google-Yahoo alliance.
"We are deeply concerned that the
Department of Justice may be considering a preemptive lawsuit to
block Yahoo's non-exclusive online advertising agreement with Google,"
they said in the letter.
"If such action were taken, we believe such
an unprecedented suit could detrimentally affect the online
advertising market and e-commerce."
Meanwhile, Senate Judicial Subcommittee chair
Senator Herb Kohl has pledged close scrutiny of the deal and
reportedly urged the DOJ to intervene if it looks like a Yahoo
tie-up helps Google dominate online advertising.
"It's dead for now and for the foreseeable
future," analyst Rob Enderle predicted.
"Anyone doing something seen as unfavorable
to the consumer is going to be pounded hard, even if just to make it
look like Congress and the (presidential) administration have their
eye on the ball."
-- AFP
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