Department of Justice Investigating the Yahoo - Google Ad Outsourcing Test
Posted by Chief Editor , Thursday, 24 April 2008

Reuters reported today that the Justice Department is investigating antitrust implications of Yahoo’s decision to outsource some of its online ads to Google.

Yahoo tested about 3% of its traffic by having Google serve up ads, instead of its own system. The tests went very well and rumors predict that talks are underway to expand this partnership even further. According to the report The Justice Department is concerned that this two-week trial run that Yahoo initiated with Google may violate antitrust laws.

An unnamed source told Reuters that the government is particularly concerned about an alleged  phone call from Google’s Chief Executive Eric Schmidt to Yahoo’s CEO Jerry Yang, in which he offered his help in dodging a Microsoft merger. Antitrust concerns about a relationship between Google and Yahoo have existed ever since rumors about the possibility came to the surface. Many observers have maintained that a deal between the two wouldn’t fly because of Google’s dominance in the search market.

Such a deal would be disasterous to domainers leaving them only one choice to monatize domains with using PPC programs.  Other publishers would be placed in a similar situation.

It would be hard to see how a Yahoo-Google partnership would help advertisers, as there would be no competition for ad space. Good to see that the Justice Department’s is looking into this.

Shares of Yahoo! closed Wednesday down 46 cents, or 1.6%, to $28.08.

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