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Advertising Group Protests Google-Yahoo Partnership

September 8, 2008

The Association of National Advertisers (ANA) said Sunday that it had sent a letter to Assistant Attorney General Thomas Barnett protesting a proposed partnership between Yahoo Inc. and Google Inc.  that would allow the two companies to collaborate on Internet search advertising.

“”¦a Google-Yahoo partnership will control 90 percent of search advertising inventory,” said the letter, according to an ANA statement.

“[the partnership] will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising,” said the statement.

In a statement released Sunday by Yahoo Inc., the company said it “remains steadfast in its belief that this deal — in which prices are determined by advertiser demand-driven auctions, not by collaboration between Yahoo and Google — will strengthen Yahoo’s competitive position…and will help to drive a more robust, higher quality…marketplace for our advertisers.”

Some advertisers have praised the partnership, which they say will offer a more efficient online advertising market.  The nonexclusive partnership covers the U.S. and Canada, but does not involve other markets.

Yahoo sealed its partnership in June with Google, the world’s leading Internet search firm, as it sought to strengthen its advertising business and deflect pressure to merge the business with Microsoft.  At the time, Google and Yahoo said they were not required to win regulatory approval before implementing the partnership, but had voluntarily delayed it for up to three-and-a-half months while anti-trust regulators evaluated the deal.

The partnership calls for Google to supply Yahoo, the Web’s second most popular search service, with advertising services to run alongside Yahoo’s own Web search system.  

Executives from both companies have rigorously defended the partnership, and say Google and Yahoo will still compete aggressively in other areas.

According to a Reuters report, Google has said it expects to begin implementing the deal next month.

Several states attorneys general, including Florida Attorney General Bill McCollum, are also are reviewing the partnership.

“It’s hard to determine when (the Florida review) will be complete,” said McCollum’s spokeswoman Sandi Copes during a Reuters interview.

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