Advertising co-operation between Google and Yahoo under scrutiny by authorities

The two-week test run of a co-operative advertising campaign in the USA, in which Google has been delivering advertisements to up to 3 per cent of Yahoo's search results, has attracted the attention of market regulators. Agency reports say that although the two firms had previously officially notified the US Department of Justice of this trial co-operation, the DoJ, as the authority responsible for anti-trust enforcement, has now decided to investigate this campaign. The content of a telephone conversation between Eric Schmidt and Jerry Yang, respectively chief executives of Google and Yahoo, has now also become known. Schmidt is said to have promised to help Yang ward off Microsoft's takeover bid.

If this test run, with Google supplying advertisements to Yahoo, satisfies both parties and leads to lasting co-operation, the two firms will own around 80 per cent of the search engine market, creating a monopoly. That's probably why the Department of Justice has opened inquiries. Co-operative advertising would beef up Yahoo's market value more than anything else, turning Microsoft's threatened hostile takeover into a costly venture.

Detlef Borchers

(trk)