The way of things
for two search giants

Few groups, particularly advertisers, appear to be rooting for Google and Yahoo's sponsored search deal. But in a letter sent to US Attorney General Michael Mukasey, 11 Democratic Congress members from California have demanded that the Department of Justice permit the deal to go through.

The letter stated that a lawsuit to obstruct the liaison may "detrimentally affect the online advertising market and electronic commerce."

Google and Yahoo announced they were making a search deal back in June. The relationship is non-exclusive and enables Google, or any other pay-per-click vendor, to place sponsored listings on Yahoo's search pages. California Congressmen argued such non-exclusive deals between rivals are "standard among Internet companies."

"Microsoft had a similar arrangement with Yahoo and Google has similar arrangements with tens of thousands of companies," they wrote. "We believe that robust competition serves the public interest but if the DOJ blocks this agreement we fear the threat of additional scrutiny may chill future agreements."

Executive director Jeff Chester of the Center for Digital Democracy is suspicious of the letter's smell. It "could have been written by Google lobbyists, and reveals a shocking lack of concern for the public interest, let alone competition," he snarled. "These House Democrats are shouting 'deregulation' to the Department of Justice when they write that the deal should go through without regulatory action."

Chester has asked the Department of Justice to either impose limits upon the liaison or block it altogether.

For their part, Google and Yahoo claim the deal would improve competition in the market, because the prominence of search ads will depend on how often searchers click on them.

Despite assurances, it has generated pushback from advertisers as well as rural and minority communities. A recent SearchIgnite study, which captured the imaginations of nay-sayers, also determined that the relationship could increase rates in the (already inflated) pay-per-click market by as much as 22 percent.

To combat these negative sentiments, both Google and Yahoo released fact sites about the terms of the deal. And late last week, in a more intimate attempt to assuage concerns, Yahoo President Sue Decker wrote a blog post about the situation:

You may have heard that the agreement gives Google control over 90% of search advertising. That’s just plain wrong. It’s simply a contract that gives Yahoo! the right, but no obligation, to show Google AdSense ads on Yahoo!’s own network.

Google and Yahoo have opted to wait until October before moving forward with their agreement, giving legal bodies time to probe it.