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September 19, 2008

Google on Antitrust: Trust Us

In case you were wondering what Google's stance is on whether or not its deal with Yahoo is bad for competition, it's official! It's all good.

Following his comments on ad pricing concerns related to the Yahoo/Google search ad pair up, Google President, Advertising and Commerce, North America Tim Armstrong responded to questions regarding competition today.

Armstrong also managed to jab arch nemesis, Microsoft, noting, "This agreement - unlike Microsoft's proposed acquisition of Yahoo - means that Yahoo will remain an independent company in the business of search and advertising. Yahoo has stated that it will reinvest the additional revenue from this agreement into improving its user services and competing vigorously against Google, Microsoft and other companies. "

Is anybody else having trouble understanding why Google would want to prop up its competition?

Armstrong answers that, alluding to co-opetition relationships between companies like Toyota and GM.

OK, wait a minute. Armstrong is now equating the flourishing search advertising industry with the sputtering auto industry? I suppose he'd also cite Yahoo's Newspaper Consortium as an example. Oh yeah -- that's another seriously ailing industry. When I see McDonald's giving BK its special sauce recipe, his argument might hold a little more weight.

On concerns that the combined search businesses would wipe out the competition, Armstrong pounded the virtual desk: "No. This agreement is not a merger. This is about expanding the pie, not dividing it differently. Yahoo! will continue to run its own search engine and advertising system."

As for data sharing, he stressed "neither company has access to personally identifiable user information from the other company." Take that privacy crusaders!

Sidenote: Indefatigable privacy activist Jeff Chester fired off an e-mail to the press today stating, "Armstrong and Google, we believe, aren’t being candid here. When an online ad company dismantles (or turns over) a core part of its search function to its leading competitor, it becomes fatally wounded. As Google knows all well, search and display (and online content) are all intertwined. Yahoo’s future, in my opinion, as a full service online ad company is endangered, as more businesses realize that its search ad business relies increasingly on Google." Ouch.

But wait! According to Armstrong, Yahoo "will use extra revenue from this deal to improve its ad platform." He goes on to state, "Yahoo also has a strong economic incentive to keep serving as many of their own ads as possible, since they get to keep all of the revenue from those ads, while Yahoo will only receive a part of the revenue from ads served by Google."

Note to Yahoo's Panama: Remember to sell your own stuff!

Posted by Kate Kaye at September 19, 2008 12:40 PM

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