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Antitrust Subcommittee Admonishes DoJ to Watch GOOG/YHOO Carefully

Chairman Herbert Kohl (D-WI) of the Senate Antitrust Subcommittee wrote a letter to assistant attorney general Thomas Barnett, urging that the Department of Justice keep a critical eye on the sponsored search relationship between Google and Yahoo.

"Even should you conclude at present that this deal is not contrary to antitrust law, the Department must be sure that [it] never […] crosses the line into an unacceptable, anti-competitive collaboration among competitors which will harm consumers and advertisers," he wrote (via Reuters.

Kohl also suggested that a red flag be raised if online prices rise as a result of the deal — or if Yahoo grows visibly stronger or weaker. The DoJ should note, said Kohl, "whether this transaction will strengthen Yahoo as a competitor or perpetuate its decline and even exit from this market."

The Senator was ambiguous about whether he thought the deal would actually harm competition. (Google and Yahoo have both insisted on the contrary.) "We do not have the benefit of the confidential business information supplied by the companies to the Department nor the economic models necessary to predict consumer and advertiser behavior," he added somewhat snarkily.

"Determining the competitive effects of this transaction, moreover, requires us to predict the future of a young and dynamic market."

Combined, Yahoo and Google control over 80 percent of the US search market. With that in mind, a number of organizational bodies have attempted to oppose the deal, but the Department of Justice has not lent any public insight on the matter.

Yahoo and Google agreed to withhold moving forward on their search deal, which would enable Google to add its pay-per-click ads to Yahoo's search results on a non-exclusive basis, until October, leaving legal bodies time to examine possible antitrust issues. But the DoJ began examining the deal back in April, long before it was formally announced in July.

At that time, Yahoo held a two-week test-run of Google's sponsored ad services. The companies did not reveal the outcome of the pilot, but results were clearly favorable.

Last week Yahoo and Google launched public fact sites about their partnership, hoping to win support with the nod to transparency.

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