DOJ Denies Yahoo! Hundreds of Millions in Revenue

by on November 5, 2008 · 5 comments

The Google Policy Blog announced today that the proposed advertising deal between Google and Yahoo! will no longer be pursued.  The DOJ has thrown up too many roadblocks and both companies have decided it’s better to move on than to try to convince regulators to change their minds.

Google seemed to go out of its way to calm regulators and other advertisers who they anticipated would be concerned by the deal given Google’s perceived market power.  The policy blog notes that:

Both companies agreed to delay implementation of the agreement to give regulators the chance to review it. While this wasn’t legally necessary, we thought it was the right thing to do because Google and Yahoo! have been successful in online advertising and we realized that any cooperation between us would attract attention.

Of course, this preemptive step didn’t help to stop competitors from running to Washington regulators to ask for the deal to be crushed.  Instead, it seems to have helped them deny Yahoo! crucial ad revenue.  The Policy Blog notes that the deal “Would have allowed Yahoo! (and its existing publisher partners) to show more relevant ads for queries that currently generate few or no advertisements.”

This is probably the best point to be made in all of this.  Yahoo! knows it’s not going to be a leader in search anytime soon, but it’s a leader in many content areas.  Its Yahoo! Mail service alone has over a quarter of a billion users, dwarfing Google Gmail.

Transitioning to a content-focused company is probably the best move for Yahoo!, a move that will be much harder without the ability to monetize its more esoteric content as well as search queries.

Once again, in trying to maintain some conception of what competition has been, antitrust regulators have prevented the competition of the future from forming as quickly as might have.

Previous post:

Next post: