Monday, 21 July 2008

Microsoft: Google-Yahoo Deal to Create Less Choice, Less Innovation, High Cost

Microsoft Corp’s senior vice president and general council Brad Smith, testified on the Google-Yahoo! deal and the future of Internet advertising last week before the Senate Judiciary Committee Subcommittee on Antitrust and the House Judiciary Committee Antitrust Task Force.

A statement released on Microsoft’s website states that in his testimony before both committees, Smith questioned the legality of the deal, outlining the damage it could do to competition in online advertising and innovation on the internet.

“If search is the gateway to the Internet, and most believe that it is, this deal will put Google in a position to own that gateway and the information that flows through it,” said Smith.
“Never before in the history of advertising has one company been in the position to control prices on up to 90 percent of advertising in a single medium. Not in television, not in radio, not in publishing. It should not happen on the Internet.

“When Yahoo! talks about this deal generating up to million in additional revenue, that’s money out of the pockets of American businesses, big and small, who will pay higher prices for the very same ads they buy from Yahoo! today,” Smith continued.

During the hearing, Smith voiced other concerns around the Google-Yahoo deal, highlighting that the agreement will give to Google an unprecedented level of control over advertising for search on the Internet – up to 90 %potentially of all search ads. This translates to fewer choices for online advertisers on the Internet, leaving them with no choice but to do business with Google thus, resulting in higher prices for advertisers.

According to Smith, the deal will also place Google in control of the gateway to the internet: searches, raising significant privacy implications.

“If one company – Google – controls up to 90 percent of online search advertising it will have a complete picture of your online activities. If that happens, Congress won’t need to enact a federal privacy policy, we will already have a national privacy policy – Google’s privacy policy,” said Smith.