Google, Yahoo! deal gets EU probe
While news of Google‘s attempts to foil its archenemy, Microsoft, from purchasing Yahoo! still lingers, an advertising alliance between the number one search engine with Yahoo! is under review by the European Union competition regulators – this is on top of the existing scrutiny from the US antitrust authorities.
The partnership between the two search engines sees them combine their search advertising systems, which allows Google to sell advertising on Yahoo! in return for a share of the profits.
This means millions of dollars in revenue for Yahoo! and the strengthening of Google’s dominance over the search engine advertising market (a classic case of the biggest getting bigger).
Since the alliance was announced in June the partnership has been criticised heavily by The World Association of Newspapers (WAN), an international organization representing 77 national newspaper associations and over 18,000 newspapers worldwide.
WAN president, Gavin O’Reilly, says the competition that currently exists between Google and Yahoo! is “absolutely essential to ensuring competitive returns for online advertising revenues of its member titles”.
His concerns echo those made last week by the National Association of Advertisers (ANA) in the US.
The ANA, which include huge corporations like Procter & Gamble and General Motors, said that the partnership would result in a 90 percent stranglehold of the search advertising market, severely diminishing competition.
A spokesman for the European Competition Commission, Jonathan Todd, says “In mid-July, we decided to open a preliminary investigation on our own initiative into potential effects of the Google-Yahoo! agreement on competition in the European Economic Area market.”
Even though both corporations said that the partnership would only affect those in the US and Canada, many European media heavyweights believe the deal will have a negative impact on advertising revenues around the globe.