Senator Urges Google, Yahoo Deal Monitoring

The chairman of the U.S. Senate's antitrust committee is recommending any deal between Google and Yahoo receive ongoing scrutiny from the Department of Justice.

Senator Herb Kohl (D. Wisconsin) is the head of the Senate’s antitrust committee, and while he’s not actually coming out against an imminent link-up between Internet giants Google and Yahoo, he is urging the U.S. Justice Department to commit to monitoring the deal if it is approved. Under the arrangement—which Google and Yahoo are looking to launch very shortly—Google will be able to sell advertising on a number of high-traffic Yahoo sites. In his warning, Kohl notes that the amount of advertising Yahoo outsources to Google could be a threat to competition in the online advertising market.

“We conclude that important competition issues are raised by this transaction,” Kohl wrote in a letter dated October 2. “Should the amount of advertising outsourced by Yahoo to Google grow significantly, we believe the threat to competition will also increase.

Both online advertisers and antitrust regulators have voiced concern of the Google-Yahoo advertising partnership, saying Google’s ability to place advertising in Yahoo’s search pages gives the company unprecedented control over the broader search advertising market. Google is already the dominant player in Internet search, controlling about 63 percent of the market in August, while Yahoo accounted for nearly 20 percent in the same time period. (Both figures are from comScore.) Combined, the two companies account for over 80 percent of the U.S. search market; roughly 40 percent of all online advertising money is spent on search placement.

Yahoo is looking to the Google partnership as a revenue boost in the wake of an a massive, abortive takeover attempt by Microsoft.